Clear Forex Backlog to Boost Naira Confidence – Lemo

A former Deputy Governor, Central Bank of Nigeria, Dr Tunde Lemo, has advised against the free floating of the naira.

He said this while speaking during an online discourse at the Boiling Point Arena on Sunday, with the theme, ‘Persistent unstable macro-economic environment: Any way out’.

Lemo said, “Naira should not be floated today. How many currencies are on free float in the world? Apart from the currencies that are internationally convertible, dollar, Euro, and maybe Japanese Yen. Even the Chinese Yaun is managed.

“Why would anybody just say that we should free up naira when we don’t have the reserve level, when we have trade and balance of payment deficit? I think that is a fast way to suicide.”

Lemo said that the apex bank must clear backlog in the foreign exchange market in order to restore confidence and shore boost naira value.

He said, “One other thing that they need to do is the new team at the central bank needs to restore confidence in the currency market. All these, while they are issuing circulars, banning this product and so on and there is no clarity about the market dynamics, all of these means that the participants in that market will not be rational, and once confidence is lost, how do you bring it back?

“They have been defaulting. Most of the commitments have not been met. You know there is a backlog of about $6.8bn of swap deals, forward deals and commitments by airlines and so on that are not met. They need to clear all of this to bring confidence back into the market.”