A former Emir of Kano, Sanusi Lamido Sanusi, has urged the Central Bank of Nigeria, CBN, to fund the bureaux de change, BDC, across the country in order to stabilize the value of the Naira.
Speaking during a webinar on the topic, ‘United States of Naira: What plan for unification,’ Sanusi said that funding the BDC will impact speculation on the country’s currency.
According to him, the COVID-19 pandemic has led to several economic shocks making speculation difficult for the apex bank.
“I think what the bank is trying to do is bridge that gap and moves have been made in July which have brought the CBN rate and the NAFEX rates closer but the BDC rates remain an outlier.
“It is a small percentage of the market, but it does have an impact on speculation, which is why it is important to fund that market.
“And once the Central Bank has enough money to fund that market, it will probably converge.
“So, I would not be interested in moving the rates towards N470, for example, but I would like to see a convergence of CBN and NAFEX, which will take care of over 90 percent of the transactions in the market and there is some small funding for BDC rate to bring it back to that level.
“It is what the IMF and the World Bank have asked for. It makes for positive transparency; it makes for clarity of direction; it also reduces the speculative demand for naira.
“For me, this is the Central Bank finally saying, basically, we will do what the market has been asking for.
“There are lots of the shocks the bank has no control over.
“I think it is extremely important that we recognize that the only clarity that the Central Bank can give at the moment is to say we do plan to converge, and that means the official rate is going to be devalued, but we are not going to do it in a rapid and disorderly manner.
“But, if they want to preserve the value of their currency, there is some virtue in waiting for an orderly unwinding of these backlogs,” he said.