Following the outrage that greeted reports that he seeks yet another Naira devaluation a day earlier, Vice President Yemi Osinbajo, on Tuesday said he called for actions to end the era of huge arbitrage between the N410/$ exchange rate and the N570/$ it is sold at the parallel market.
The current Naira exchange rate, he said in a statement by Laolu Akande, his spokesman, benefits only those able to obtain the dollar at the official rate, adding that the point was about “stopping this huge arbitrage of over N160 per dollar.”
The statement added that Prof. Osinbajo has always “argued against a willy-nilly devaluation of the Naira… which was why the Vice President called for measures that would increase the supply of foreign exchange in the market, rather than simply managing demand, which opens up irresistible opportunities for arbitrage and corruption.
“It is a well-known fact that foreign investors and exporters have been complaining that they could not bring foreign exchange in at N410, and then have to purchase foreign exchange in the parallel market at N570 to meet their various needs on account of unavailability of foreign exchange. Only a more market reflective exchange rate would ameliorate this. With an increase in the supply of dollars, the rates will drop and the value of the Naira will improve,” he added.
The real issue confronting the economy on this matter, he continued, “is how to improve the supply of foreign exchange, but this will not happen if we do not allow mechanisms like the Importers and Exporters window to work. If we allow this market mechanism to work as intended, we will find that the Naira will appreciate against the dollar as we restore confidence in the system.”