Prof Nwaekeaku says CBN’s intervention in forex market is temporal

Prof. Charles Nwaekeaku of Nassarawa State University, says the Central Bank of Nigeria (CBN) interventions in the Foreign Exchange Market (FOREX) is a temporary relief.

Nwaekeaku, a lecturer at the Pubic Administration Department, told the News Agency of Nigeria (NAN) in Abuja that CBN might not be able to sustain the interventions.

“CBN’s intervention in the foreign exchange business is a welcome development but it is a temporary relief because the money CBN injects into the foreign exchange is money derived from oil."

“That means that anytime the price of oil falls again the money will vanish and we do not have much reserve and that means the measure is temporal,” he said.

He suggested that what should actually be done was for government to ensure good business environment in the country and diversify the economy.

According to him, if we go into manufacturing, productivity will increase and when that is done, the pressure on the foreign exchange will reduce.

“This is because we will not be asking for foreign exchange for goods and services that we can produce locally."

“The problem is that the demand for foreign exchange is very high and the money from oil is what is being used to supply and it is temporal, it is not sustainable."

“Therefore, government should make efforts to diversify the economy and ensure that we reduce the demand for foreign exchange."

“When we reduce the demand for foreign exchange and then increase productivity, even prices of things will come down and then you will have sustained foreign exchange regime."

The don noted that due to the inflationary nature of Nigeria’s economy, when goods were imported into the country the price of such goods were usually high.

This, according to him, is because such goods have to be transported, they have to be warehoused and the importers still have to tackle with power, all of these increasing costs.

He said that these factors made the prices of goods in the market to continue to rise in spite of the interventions by the government in Forex.