Sanusi Advocates Stable Exchange Rate for Businesses, Economy 

Oluchi Chibuzor

Former Governor of the Central Bank of Nigeria (CBN), Muhammadu Sanusi II has stated that the rate at which the naira exchanges against dollar is not as important as the stability of the naira at official and parallel markets.

Speaking as a special guest of honour at the seventh Financial Markets Dealers Association of Nigeria (FMDA) Annual Conference in Lagos, he advised the apex bank to pay more attention to achieving exchange rate stability for the growth and development of the businesses and economy.

Sanusi, who was the 14th Emir of Kano, spoke on the theme: “Impact of Forex Policies in the Nigerian Economy,” adding that the primary task of CBN is to provide exchange rate stability, not growth but should create environment that supports growth. 

He said: “There is nothing we are facing today, that was not foreseen. Exchange rate should be predictable. The rate at which the naira exchanges to dollar is irrelevant, what is key is stability of the exchange rate.”

Sanusi said although the CBN does not generate dollar, it should creates an environment that attracts dollar investment into the economy.

He kicked against free float of the naira, saying that the naira exchange rate should not be left entirely on market forces to determine.

He advised the apex bank team to keep naira around N850/$ and reduce the gap between the official and parallel market rates. 

Speaking on the role Central Bank in Macroeconomic Stability & Financial System Supervision, Chairman, Titan Trust Bank and former CBN Deputy Governor, Operations, Tunde Lemo, said the financial system is sound, but requires close monitoring. 

“We should support the planned recapitalisation of banks by the Central Bank of Nigeria, but one cap fits all is not correct. Banks should be recapitalised based on the risks they want to take,” he advised. 

Lemo said the the recent foreign exchange reform, which paved the way for a fully liberalized FX market, is laudable, but more efforts should be geared toward improving FX availability to reduce the rate of currency depreciation and inflation pass-through.

Also speaking, Managing Director/CEO Guaranty Trust Bank Limited, Miriam  Olusanya, said Nigeria is shifting to a more market-driven economy, that should be supported with the development of strong credit market.

Shee said the as agents of financial markets, banks have continued to support the economy and businesses through deposit mobilisation. 

“Banks enable capital to move to areas of support. Safety and soundness of financial markets should be of concern to regulators,” she said. 

In her opening remarks, President, FMDA Ms. Nadia Zakari, said FMDA has also for years, helped to guide the financial services sector and supported markets growth. She said that role will be sustained in the interest of the economy. The central theme of the conference was: “The Role of Financial Markets in Repositioning the Economy”

CEO, Graeme Blaque Advisory, said Nigeria’s growth is tied to dollars because we have not developed key industries in the country.

He said that infrastructure bottlenecks have limited business growth and development.