FOREX: Why Nigeria Introduced Multiple Exchange Rate System, CBN Governor Tells W’Bank President

Nigeria’s Central Bank Governor, Mr. Godwin Emefiele, has defended the multiple exchange rate system as against the single exchange rate policy being practised in other parts of the world.
Emefiele gave indication that the exchange rate policy in Nigeria was aimed at deepening production of goods other than importation which gulps a lot of foreign exchange.
Responding to a statement by the President of the World Bank Group, Mr. David Malpass, on the need to have single exchange rate instead of multiple exchange rate, Emefiele said this was for peculiar reasons in Nigeria.
The World Bank Chief had observed that Nigeria’s exchange rate system was complicated and not as effective as single exchange rate system.
The CBN Governor in response said this was because “different countries have different challenges and must develop solutions that would help address their challenges.”
According to a report by Thisday, Emefiele said the
bank’s managed-float exchange rate system was adopted to address the peculiar challenges the country faces.
The CBN governor spoke during an interview with journalists on the sidelines of the IMF/World Bank Spring Meetings in Washington DC, United States of America.
Emefiele was quoted saying, “Both the IMF and World Bank are our prime development banks, and we have receive support from them at different times in resolving some of our economic challenges, particularly bothering on finance.

“Nigeria’s situation is very peculiar and that is why we have continued to engage the IMF and World bank to show understanding in our local problems. And they are indeed showing understanding.

“Yes they want us to freely float the exchange rate and you do know that this will have some impact on the exchange rate itself in the sense that when you allow that to happen, you will have some uncontrollable spiral in the country’s exchange rate.
“We are doing everything possible to restructure the base of the economy through some of the policies that we have put in place to deepen the production of goods in Nigeria.”

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