Finance Column Hub
Forex

IMF proffers solution to Nigeria’s forex crises, Naira depreciation

The International Monetary Fund (IMF) has offered advice to the Central Bank of Nigeria (CBN) on exchange rate management, and how to solve the Naira’s depreciation.

According to the institution, for Naira to find its value and also solve current forex crises, the CBN should empower commercial banks to set dollar buy-sale prices.

It stressed that if commercial banks have the power to determine the exchange rate, it will increase foreign capital flows into the economy.

The IMF gave the advice in its 2022 Article IV Consultation concluding statement published on Friday.

READ ALSO:IMF questions NNPC’s claim on 66m litres daily fuel consumption

“Maintaining a uniform and market-clearing currency rate is vital to increasing foreign investor confidence in the economy,” IMF said.

IMF also insisted that continued forex shortages, a stabilised exchange rate regime, rising inflation, limited debt servicing capacity, and administrative restrictions on current transactions fuel devaluation speculations.

“These factors hinder much needed capital inflows, encourage outflows and constrain private sector investment. The mission reiterated its past recommendations to move towards a unified and market-clearing exchange rate by dismantling the various exchange rate windows at the CBN accompanied by clarity on exchange rate policy and supportive fiscal and monetary policies.

“In the medium term, the CBN should step back from its role as main forex intermediator, limiting interventions to smoothing market volatility and allowing banks to freely determine forex buy-sell rates,” it stated.

Join the conversation

Opinions

Support Ripples Nigeria, hold up solutions journalism

Balanced, fearless journalism driven by data comes at huge financial costs.

As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.

If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.

Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.

Donate Now

Source link

Related posts

Week Ahead: It’s all about the FOMC and the BOE

J Howdo

Sri Lanka forex reserves at US$1,777mn in Sept 2022

J Howdo

The current scenario and the way forward

J Howdo

Leave a Comment