Godwin Emefiele, the Governor of the Central Bank of Nigeria (CBN), has revealed why the apex bank cannot to freely float the currency despite pressure from the World Bank and the International Monetary Fund (IMF).
Freely floating the exchange rate, according to Emefiele, will result in an unmanageable spiral impact on Nigeria’s exchange rate.
This was revealed by Emefiele during a press conference on the sidelines of the IMF/World Bank Spring Meetings in Washington DC, United States of America (USA), in response to a call by World Bank Group President David Malpass for Nigeria to abandon its multiple exchange rate systems in favour of a single one.
Emefiele, who emphasized that various countries have different issues and must find solutions to solve those challenges, stated that the CBN will continue to educate the IMF and World Bank about Nigeria’s unique circumstances and how to handle them in order to advance the economy.
In his words, “Both the IMF and World Bank are our prime development banks, and we have received support from them at different times in resolving some of our economic challenges, particularly bothering on finance.
“Nigeria’s situation is very peculiar and that is why we have continued to engage the IMF and World Bank to show understanding of our local problems. And they are indeed showing understanding.
“Yes they want us to freely float the exchange rate and you do know that this will have some impact on the exchange rate itself in the sense that when you allow that to happen, you will have some uncontrollable spiral in the country’s exchange rate.”
He further noted that the CBN was regulating demand by restricting excessive imports of petroleum products and other goods.