If the Central Bank Governor Godwin Emefiele continues to hold the official exchange rate of the naira indefinitely, the market could be distort and lead companies and individuals to buy at official rates to sell back their dollars on the interbank and black markets at a profit.
The Head of Africa Economic Research at Standard Chartered Plc in London, Razia Khan, said this in her reaction to the report on Thursday that President Muhammadu Buhari on the same page with CBN governor on regulation of the naira.
She said that what the Central Bank would do is to hold the fixed exchange rate and allow the companies deemed strategic, such as fuel importers to have access to the official rate.
She added that the regulator may then let everyone else use a more liberalised interbank market in a bid to encourage foreign-exchange inflows.
“There has been increasing talk of the possibility of a two-tier exchange rate,” said Khan. “Nigeria had one in the past. All it did was encourage round-tripping. You cannot police it.”
According to Carol Ashbourn of Capital Economics, Emefiele could try to maintain the current regime indefinitely, which may lead to the black market being the only source of dollars for most Nigerians and “risks pushing the country into a Venezuela-type crisis.”
The South American oil exporter, where the official rate of 6.3 bolivars per dollar is almost irrelevant against a black-market rate that’s as high as 850, declared an economic emergency this month.
“For Nigeria, it would mean such a complicated system that would inevitably create corruption and waste. In an economy where so much is imported, it would be incredibly painful,” he said.
