Ex-CBN chief sees pressure in FX market after ‘difficult’ decision

A former deputy governor of the Central Bank of Nigeria, Mr Kingsley Moghalu, has said the apex bank’s decision to lift the eight-year-long foreign exchange ban on 43 items will put some pressure on the official market.

The move, which was announced on Thursday, “is a difficult one but I believe it’s the correct call”, he said on social media platform X on Friday.

Moghalu recalled that in an opinion piece in the Financial Times in 2016, he criticised “the original irrational decision which fed black markets”.

The way to handle this matter is to find a way to make imports more expensive than locally produced items through tariffs on imports and electricity reforms to reduce the cost of manufacturing in Nigeria, he said. 

“It is not through economically illiterate ‘bans’ that fuel smuggling and black markets for forex,” he added.

Moghalu said, “The decision will put some pressure on the official forex market though, and at the end of the day the only solution is an increased supply of forex. 

“That raises other issues of confidence in the Nigerian economy which is scarce right now because of weak oil revenues from oil theft, and other governance challenges that have made investors cautious for now.”