A former Deputy Governor of the Central Bank of Nigeria, Kingsley Moghalu, says the value of the naira will fall from N570/$1 to N400/$1 at the parallel market if there is a massive rush of dollars into the Nigerian market through export earnings.

Moghalu made this known in a PUNCH Live Interview on Thursday.

He said, “The reason we have the prices we have is that the official rate is perceived by the market not to be the real rate; that’s the fundamental reason why you have a huge gap of N410 at the official rate – Investors and Exporters’ Window – and then N570 in the black market. That is unbelievable.

“Normally, you will have a gap between the official rate and the parallel market but in our time, we made sure that that gap was not a lot – it wasn’t more than N10, N15, max N20.

“What is happening now shows that there is a very fundamental crisis in the Nigerian economy. And unfortunately, the economy does not respond to political commands, the economy does not respond to political statements, the economy does not respond to military orders; the market responds to its own dynamics – demand and supply.

“If you have a massive rush of dollars into the Nigerian market today, the price of the dollar would crash and the naira can come to N400 in the black market, you may be shocked.

“So, it is about going to fix what would bring in the quantity of dollars that would rebalance the equation.”

CBN needs to gain investors’ confidence’

Moghalu, who was a deputy governor at the apex bank between 2009 and 2014, also explained how the apex bank stabilised the naira against the dollar for five years during his time at the bank, noting that the CBN must work on gaining the confidence of investors.

Moghalu had deputised Sanusi Lamido Sanusi, who was CBN Governor from June 2009 to February 2014.

Both Sanusi and Moghalu were at the apex bank during the administrations of the late President Umaru Yar’adua and then-President Goodluck Jonathan.

During the period, the naira steadied around N150/$1. However, the naira has maintained an unprecedented downward trend in the last six years since the beginning of the administration of the current President, Major General Muhammadu Buhari (retd.), and the CBN Governor, Godwin Emefiele.

The naira now trades at N570/dollar at the parallel market while it trades around N412/$ at the I&E forex window which is the only official rate recognised by the CBN.

The downward trend of the naira had fueled calls for the sacking or resignation of the CBN Governor, Godwin Emefiele, by some political groups including the Peoples Democratic Party. They blamed Emefiele, who has been CBN governor since June 2014, for poor monetary policies.

However, speaking on Thursday, Moghalu blamed the downward trend of the naira on the activities of speculators and the lack of autonomy of the apex bank.