IMF
FOREX unification is right step, IMF hails Nigeria
The Federal Government has been commended for its decision to unify forex exchange rates by the International Monetary Fund (IMF).
The IMF said the government took the right decision by operating a free-floating exchange determined by the market by the International Monetary Fund (IMF).
The Central Bank of Nigeria, CBN, had collapsed all its multiple official FX exchange rates into the Investors and Exporters (I&E) window.
A statement quoted the IMF Representative in Nigeria, Mr Ari Aisen, as saying this development had been a longstanding recommendation to Nigeria and that the Fund is ready to provide technical assistance to enable this policy succeed.
This occurred as the Naira is picking at the I&E window to N663/$1 from N702/$1, closing with a N39 gain for the Naira previously.
Ari stated: “The Fund greatly welcomes the authorities’ decision to introduce a unified market-reflective exchange rate regime in line with our long-standing recommendations. We stand ready to support the new administration in its implementation of FX reforms.”
Also, on the parallel market, the nation’s currency appreciated by N2 from N762/$1 the previous day, to N760/$1 yesterday
It would be recalled that the Fund in its Article IV Consultation with Nigeria released in February this year had recommended the removal of fuel subsidies, unification of exchange rates, and an array of fiscal reforms which the current administration in its early days is already implementing.
The IMF in that recommendation stated: “Directors encouraged a continued move toward a unified and market-clearing exchange rate by dismantling various exchange rate windows at the CBN. Providing clarity on exchange rate policy would help boost investor confidence, quell capital outflow pressures, and rebuild buffers.”
The directors were also said to have urged for decisive and effective monetary policy to avoid a spiralling inflation.