Current exchange rate not backed by fundamentals of the Nigerian economy – Wale Edun

The special adviser on monetary policy to President Bola Tinubu and Ministerial nominee has said the current exchange rate of the naira to the dollar is not backed by fundamentals of the Nigerian economy but by speculation.

Chief Edun made this known while appearing before the Senate for confirmation and fielding questions from senators.

Exchange rate not backed by fundamentals

While answering questions from the senate minority leader on the exchange rate, he said

“What I can say is this, for a country that has revenue flows from oil, remittances, and other non-oil exports of over $100 billion yearly, there is no reason that there is not a stable exchange rate.

“All other things being equal, the current N860/$ we are seeing today is not backed up by fundamentals of the Nigerian economy.”

Speaking further, the likely finance minister said speculators and the mismanagement, inefficiency and corruption of the previous administration have created an overhand of unpaid dollar bills which is responsible for the pressure on the exchange rate.

He noted the Tinubu administration hopes to resolve this by raising revenues, attracting investment and equity funds and not debt.

Exchange rate should be N700/$

When speaking on the likely exchange rate after their policies have been rolled into action, he said

“It is difficult to predict because the exchange market takes up a psychology of their own. I would just like to warn that all the models are showing that the fundamental value of the naira should be somewhere around N700/$.’’

He further warned speculators to be cautious that as liquidity flows in and rates go down, there is a chance they’ll lose their bets. “It is just a warning,” he said.

Mr. Edun also used the opportunity to argue for a separation between the office of the accountant-general of the federation and the accountant-general of the federal government saying that has been his position for a long time.

Subsidy and palliatives

On subsidy and distribution of money to the poor, the President’s special adviser said “The removal of subsidy and elimination of multiple exchange windows has put us in a strong position going forward”

For palliative, he said, “A digital identity for every Nigerian is what is needed and what tis recommended for us. The condition attached to the $800 million world bank loan states so”

What you should know

President Bola Tinubu appointed Chief Wale Edun as his special adviser on monetary policy and also a Ministerial nominee by the President.

Many tout the President may likey assign Chief Edun as the country’s finance Minister owing to his background in economics, monetary policy, investment banking and development finance.

He was also commissioner of finance in Lagos during the tenure of the Tinubu administration.