There have been many proponents for a floating exchange rate regime as a means of addressing the rigidities of the Nigerian foreign exchange market. Typically, this precedes currency convertibility and reduces the need for monetary authorities to intervene frequently in the forex market. However, the CBN Governor, at the recently concluded MPC meeting, is of the opinion that floating the currency is a road to perdition.
Nigeria’s oil revenue is projected to decline due to softer Brent prices and the country’s new OPEC output quota of 1.69mbpd. This would have significant implications on the balance of trade and terms of trade which are major determinants of exchange rate movements.
In this edition of the FDC Bi-Monthly publication, the FDC Think-Tank analyzes these issues and their implications on businesses and investment decisions.
Enjoy your read.