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Friday Udoh, former coordinator of Institute of Chattered Economists of Nigeria (ICEN), South-South zone, said the recent decision by the Central Bank of Nigeria (CBN) to float the exchange rate of the naira was good for economic development of the country at this critical stage of dwindling oil revenue.
Udoh, who is also expert in gas value chain, said it had become obvious that the policy of artificially fixing the rate of exchange of the national currency by the CBN was no longer sustainable, especially given the crash in crude oil prices.
“The new policy would provide a level playing ground for businesses that need to access foreign currency, especially the US dollars for their operations,” he said.
The ICEN South-South zone former coordinator said the CBN, by making the floating exchange rate as a single window for all transactions, had removed the likelihood of some business people, especially financial institutions to engage round-tripping and arbitrage – simultaneous buying and selling of the same negotiable financial instruments of commodities in different markets in order to make an immediate profit without risk.
He said the policy would help the business community to know the effective demand for foreign exchange, especially the US dollars.
