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Experts in economic and financial matters have pilloried Vice president ,Yemi Osinbajo as not having beep knowledge of how economics works.
Vice-President Yemi Osinbajo on Monday called for an official rate that is reflective of market reality.
He said the current dual exchange rates allowed for arbitrage and blocked inflow/supply of dollars from investors
A professor of capital market at the Nasarawa State University Keffi, Uche Uwaleke, said, the implications of devaluing the naira now were quite scary.
He said, “The first casualty will be the 2022 Appropriation Bill. It means the 2022 budget, which is predicated on N410.15 per dollar is dead on arrival.
An economist and lecturer at the Lagos Business School, Dr Bongo Adi, said, “The exchange rate is a secondary indicator, driven by other economic factors. Vice President Yemi Osinbajo, with all due respect, displayed a lack of understanding of the economy.
“We need to ask why the naira is overvalued. It is simply because we have not been able to improve our export profile.
“We have not been exporting much, the only thing we export is oil. Even the volume of oil production and oil export has gone down in recent times. Without an enormous export profile, you may not have currency appreciation.
“We can say our export profile is not that big, and we keep borrowing money from outside. If you keep borrowing, your exchange rate will depreciate.
“The government has taken borrowing as a way of life, and this has made the naira devalue. When they say the market should drive the exchange rate, why shouldn’t the market drive the economic production and infrastructure in Nigeria?
“The Vice President obviously means well. But this statement is capable of triggering panic buying and speculation in the forex market (official and parallel) and further complicating things for the CBN.
“No doubt, devaluation will force down the volume of imports and reduce the pressure in the forex market temporarily. But have we thought of the impact it would have on pump price of fuel and the multiplier effects?
“How about the knock-on with regard to inflation and interest rates especially at a time when inflation rate remains elevated? Is high inflation rate not inimical to investments whether local or foreign?”
He said the argument that naira devaluation would incentivise foreign investors remained to be seen as other factors such as insecurity equally play a part.
The naira, he added, had suffered several devaluations in recent past.
He said, “It has neither solved the fundamental problem of helping to diversify the export base nor curbed unbridled imports. Doing so yet again will not change anything. Rather, it is a recipe for high poverty and unemployment levels
