Cross River – An economist, Mr Bismark Rewane, has urged the Federal Government to embark on oil subsidy removal to ensure efficient and effective foreign exchange rate policy on the economy.
Rewane spoke at the Finance Correspondents and Business Editors seminar organised by the Central Bank of Nigeria (CBN) on Wednesday in Calabar.
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The theme of the seminar is: “The impact of crude oil prices on external reserves and exchange rate management in Nigeria”.
Speaking on the paper titled: “Evolution of the Foreign Exchange in Nigeria and the Way Forward”, he said that the removal would make the CBN monetary policies to be immediately felt in the economy.
Rewane said that apart from the removal of oil subsidy, the government needed to consider structural adjustment otherwise “the naira will continue to suffer’’.
“Once that is done, the actual price of the naira will be determined and then the exchange rate will be brought down making the currency adjustment minimal.’’
Rewane, who is the Chief Executive Officer, Financial Derivative in Lagos, said that failure to embark on oil subsidy removal could erode the gains to be derived from all the exchange rates policies being implemented by the CBN.
He said that the CBN’s movement away from the Wholesale Dutch Auction System (WDAS) to Retail Dutch Auction System (RDAD) and later the closure of the interbank market to control the FOREX market was a good policy initiative and “a step in the right direction’’.
Rewane said that the CBN’s decision showed that the move was to ensure that the exchange rate was determined by the market forces.
The economist, therefore, urged the apex bank to look into a mechanism whereby the market continually determined the exchange rate rather than the banks fixing it.
He said that the exchange rate should not be seen only as a medium for import but for the optimisation of the nation’s economic arrangement. (NAN)
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