In a bid to counter the Naira’s alarming depreciation in the foreign exchange market, economist Paul Alaje, Chief Economist at SPM Professionals, proposes a strategic fix for the Nigerian government. Alaje emphasized the necessity of issuing foreign currency receipts for every litre of crude oil sold as a rapid remedy to boost confidence among investors, particularly multinational corporations.
During a recent interview with Channels Television, Alaje underscored the critical need for firm policy implementation to restore faith in Nigeria’s economic landscape. “If we lift one litre of crude oil in Nigeria, all the receipts must be in foreign currency. This is a short-term measure that will significantly enhance FX inflows into Nigeria,” he emphasized.
This recommendation comes in the wake of the Central Bank of Nigeria’s (CBN) recent circular, removing the cap on exchange rates quoted by International Money Transfer Operators (IMTOs). The circular, signed by Hassan Mahmud, Director of Trade and Exchange Department, aims to address the volatility in the country’s FX market.
In response to the Naira’s recent free fall, the CBN has implemented a series of policy interventions, including guidelines to curb foreign currency hoarding and speculation. The impact has been evident, with the Naira rebounding against the US dollar on Wednesday. However, as of Thursday’s close at the FMDQ market, the forex rate remains elevated at N1461.90 per dollar.
As Nigeria grapples with economic challenges, Alaje’s strategic proposal sheds light on a potential avenue to stabilize the Naira and attract much-needed foreign exchange. Whether this recommendation will be embraced remains to be seen, but its potential impact on bolstering investor confidence is undeniable.
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