Business
AN Economist, Dr. Boniface Chizea, said on Tuesday in Lagos, that the current exchange rate adjustment from 360 to 380 to the dollar by the Central Bank of Nigeria (CBN) would spike inflation in the country.
Chizea, who is the Managing Director of BIC Consulting Services, told the News Agency of Nigeria (NAN) that the increase would negatively affect all sections of the economy.
NAN reports that CBN announced the exchange rate adjustment on its website, on Aug. 6.
“The implications of this development for the economy at large, the Small and Medium Scale enterprises is that inflationary pressures will be on the increase as the rate of exchange is a veritable factor cost.
“Inflationary spirals depresses purchasing power, undermine capacity utilisation, result to reduction on the levels of employment, constrain economic growth and development and generally increase the misery index in the land.
“But the reality of the matter is that the Central Bank has been fighting a rear guard battle to stem the rapid fall in the rate of exchange which is increasingly becoming a daunting task,” he said.
According to him, what will really result in exchange rate unification is adequate supply of foreign exchange.
He said that once supply was sufficient, it would at least ensure legitimate foreign exchange demands were met at the official exchange rate window.
He said: “the reality is that the only significant parameter that separates all the exchange rate windows in the country is the rate differential.
“Would what has happened now tantamount to an attempt to bridge the exchange rate gaps which might lead to the unification of the exchange rate? I don’t think so.
“So, what has just happened is the CBN accepting the reality of foreign exchange crunch while attempting to make it more costly in Naira terms,”
NAN
Aug. 11, 2020 | 15:30
Tags: Exchange rate adjustments will spike inflation—Economist
