Lack of sufficient supply responsible for pressure on FX—Peter Obi

Peter Obi, Labour Party’s presidential candidate in the 2023 election, has explained that the pressure on the FX is due to the lack of sufficient supply to float the naira against the dollar.

Obi who made the assertion while featuring on Arise TV’s ‘The Morning Show’ said the federal government should have consulted its economy team in ensuring the supply of FX, albeit putting in place initiatives to encourage export.

“You can’t float a currency you don’t have supply with. It’s like building a non-gated house in a criminal-ridden society. You have to have a defence mechanism. Nobody floats what you don’t have a supply for. I believe that now that we have new CBN leadership, they have to look at the overall monetary policy.

“It’s again not something you announce haphazardly. It’s something you look at critically. Nobody floats his currency without having an adequate supply. When you don’t have adequate supply, there will be pressure and criminality. We should have worked on eliminating those criminalities and excesses in our FX regime,” he said.

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Speaking on how his party would have approached the conundrum, he stated that they would have opted for the devaluation of the naira instead of leaving it open to market forces by floating the currency.

“What we would have done is devalue the currency to about 600 or thereabout while trying to manage what you have and encouraging exports. I can tell you that not even in the developed world has anybody left their currency to market forces because you might not be able to control it. After all, you cannot reverse your policy.

“These are announcement defects that would have been well thought through by a proper economic team and consultation,” he added.

It would be recalled that in June 2023, the Central Bank of Nigeria (CBN) unified exchange rate windows to maintain Naira stability against foreign currencies, notably the United States Dollar.

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And since then, the Naira has been on a free-fall against the Dollar.

The dollar rate in the investors’ and exporters’ window hit N810.78/$1 on Thursday, the highest rate for the day, and also fell to a low of N590/$1.

In the parallel market, the bureau de change operators demanded an average rate of N1008 per dollar, increasing their asking price slightly from N1000.

The former Anambra state governor agreed with the decision to remove the fuel subsidy, but said he would have taken a different approach in implementing the policy.

Obi said that the gains from removing subsidies should have been invested in critical areas such as education, health and poverty alleviation programmes.