The Central Bank of Nigeria (CBN) devalued the naira in the official market with authorised dealers expected to sell the dollar at N664.04/$1 after the close of trading on Wednesday.
The naira was devalued by 40.7 percent, with the price of the dollar rising by N192.37 kobo this night.
Professor Uche Uwaleke said, “It is rather early to bank on sustainable capital inflows from foreign direct investments due, in part, to insecurity and the overall unconducive environment of doing business in Nigeria.
“This sudden Naira devaluation may draw foreign portfolio investments, which is part of the reason the stock market is surging. But we also know that portfolio investments are hot money and do not represent a sustainable source of forex inflows,” he said.
Uwaleke said that the unification of exchange rates should not be a one-step process but should be implemented over some time, however short it may be.
However, in their own reaction, the Centre for the Promotion of Private Enterprise (CPPE) said that the unification of the naira exchange rate would boost government revenue by a minimum of N4 trillion.
Dr. Muda Yusuf, Director/CEO of CPPE who stated this, added that the liberalization of the foreign exchange market would unlock the huge potential for investment, jobs, and capital flows. Investors’ confidence would be positively impacted.
Yusuf noted that it was important to reiterate that this is not a devaluation policy; it is a normalization of the foreign exchange policy regime and an adjustment of rate to reflect the fundamentals of demand and supply.
