Lemo advises CBN to clear the forex backlog to increase naira confidence

Dr Tunde Lemo, a former deputy governor of the Central Bank of Nigeria, has recommended against allowing the naira to float freely.

This was mentioned by him on Sunday at the Boiling Point Arena during a discussion with the title “Persistently Unstable Macroeconomic Environment: Any Way Out.”

Naira shouldn’t be floated today, Lemo remarked. How many different currencies are in free circulation globally? The dollar, the euro, and possibly the Japanese yen are the only currencies that can be converted into other currencies. The Chinese Yaun is also controlled.

“Why would someone simply state that we should devalue the naira when we lack the necessary amount of reserves, when we have a trade and balance of payments deficit? I believe that is a quick way to commit suicide.

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Lemo stated that in order to restore confidence and shore up the value of the naira, the apex bank must clear the backlog in the foreign exchange market.

He continued, “They also need to get the new management at the central bank to rebuild trust in the currency market. All of these indicate that the market participants won’t act rationally while they are releasing circulars, outlawing this product, and so forth while the market dynamics are unclear. Once confidence is lost, how can it be regained?

“They have a history of default. Many of the obligations have not been fulfilled. You are aware that there is a backlog of unfulfilled swap arrangements, forward deals, airline commitments, and other obligations totaling around $6.8 billion. To restore the market’s confidence, they must resolve everything.