Exchange rate means nothing, what matters to Nigeria is stability – Afreximbank President

He made this statement during an exclusive interview with ARISE NEWS, where he also stressed that the best course of action at the moment is to stay on course as Nigeria cannot afford to pull out of this process, as that will just “postpone the evil day.”

According to him, freeing the market in terms of foreign exchange was the right decision, but its impact became more severe because the subsidy was removed simultaneously.

“You know, for me, exchange rates is, let me use the word, doesn’t mean anything. What matters to the markets is stability. Studies have shown instability is the volatility the markets don’t like. Because once you are able to stabilise the exchange rate at a point, prices will adjust, markets will adjust, things will return to normal. So, I believe the government, they have capable people that they have in finance, they have in central bank, who would be able to stabilise this economy,”

He said the exchange rate reform came at a time when other things are difficult is why perhaps the impact has been more severe.

“We also removed the subsidy on petroleum products, and because we are importing petroleum products, now if the currency devalues, it immediately impacts the price of petroleum products, which either is borne by the person on the street or by the government that tries to subsidise it in a different way.” he said.

He said that is why it looks like things are really bad, and indeed they are really bad. He clarified, “I’m not saying they’re not bad. Inflation is high and all that, but my advice is to stay the course because when the economy is in the situation we have today, you know there are two things you do: stabilization policies and growth policies.”

He stressed that the first thing is to stabilize the economy. When stabilizing the economy, growth-oriented policies should not be pursued immediately, as doing so would add fuel to destabilization.