Former CBN Deputy Governor Criticizes Naira Exchange Rate Expectations

A former Deputy Governor of the Central Bank of Nigeria, Kingsley Moghalu, has raised concerns over the unrealistic expectations regarding the stability of the naira exchange rate to the dollar. Expressing his views on his X account, Moghalu dismissed the idea of the naira stabilizing at N400 to the US dollar as a dream world scenario.

He emphasized that the exchange rate should reflect its actual market value rather than an artificial value imposed by past CBN policies to appease political authorities. This artificial maintenance led to massive arbitrage opportunities for speculators and negatively impacted the economy.

Moghalu highlighted Nigeria‘s lack of a robust productive export economy as a fundamental issue affecting the exchange rate. He pointed out that the country’s foreign reserves are not sufficient to support a return to a lower exchange rate level.

The former CBN official stressed the importance of transitioning towards a value-added manufacturing export economy to boost forex earnings beyond oil dependency. He underscored the need to address Nigeria’s longstanding electricity challenges, advocating for a significant increase in power generation to unleash the entrepreneurial potential of the country.

Moghalu referenced countries like South Africa and Brazil, highlighting their higher electricity generation capacities relative to their populations and emphasizing the potential economic benefits of a similar improvement in Nigeria’s power sector.