An Economist, Dr. Boniface Chizea, has said that the current exchange rate adjustment from N360 to N380 to the dollar by the Central Bank of Nigeria will spike inflation in the country.
Chizea, who is the Managing Director of BIC Consulting Services, told the newsmen in Lagos on Tuesday that the increase would negatively affect all sections of the economy.
“The implications of this development for the economy at large, including the Small and Medium-scale Enterprises, is that inflationary pressures will be on the increase as the rate of exchange is a veritable factor cost.
“Inflationary spirals depressed purchasing power, undermine capacity utilisation, result in reduction on the levels of employment, constrain economic growth and development and generally increase the misery index in the land.
“But the reality of the matter is that the Central Bank of Nigeria has been fighting a rear guard battle to stem the rapid fall in exchange rate, which is increasingly becoming a daunting task,” he said.
According to him, what will really result in exchange rate unification is adequate supply of foreign exchange.
Once supply is sufficient, it will at least ensure legitimate foreign exchange demands are met at the official exchange rate window, he added.
His words, “The reality is that the only significant parameter that separates all the exchange rate windows in the country is the rate differential.
“Would what has happened now tantamount to an attempt to bridge the exchange rate gaps, which might lead to the unification of the exchange rate? I don’t think so.
“So, what has just happened is the CBN accepting the reality of foreign exchange crunch while attempting to make it more costly in naira terms,” he said.
