Rewane To Emefiele: ‘It’s Primitive Economics To Run After Bank Customers Changing Naira To Dollar’

Bismarck Rewane,  the Managing Director and the Chief Executive Officer of Financial Derivatives Company Ltd has described the decision of the Central Bank Governor, Godwin Emefiele, to clamp down on people who exchange naira to dollar for electioneering purposes as primitive economics.

Rewane who is a member of the economic advisory council said this on Arise Tv while discussing the country’s inflation and naira devaluation.

The economist said this on the backdrop of the setbacks arising from the foreign exchange scarcity linked to the devaluation of the naira to N720 by July ending.

At the CBN official window, the naira is trading at N418.47 on Tuesday.

Rewane said, “When you look at the exchange rate. What is the fair value? Then you add the fair premium and then you add speculation. One can argue that today the parallel market is now basically N670 this morning.

“The I&E window rate is N428. So, N200 to N300, even the Pope will be lured, because this is the speculator’s paradise. What you need to do is let’s converge, have a programme towards convergence, increase the supply, by so every dollar you sell takes away naira liquidity out of the system.

“There is no point moving your policy rate to 14 per cent and leaving your treasury bill rate at 4 per cent. It doesn’t make sense. Nobody saves money at the policy rate. People save money at the treasury bill rate and the other rates. What you need to do is to bring market reality. There is no point deceiving yourself.”

Foreign exchange crunch had also forced Emefiele, to warn bank customers against converting the naira to foreign exchange, for electioneering purposes at the post-Monetary Policy Committee (MPC) meeting briefing in July.

The warning which was at first unclear on who it applies was greeted with criticism.

But the Bank’s Director, Corporate Communications Department, Mr. Osita Nwanisobi, explained that it doesn’t apply to those who seek to exchange the currency for legitimate purposes such as payment for tuition and other personal expenses.

Rewane, reacting to the decision, noted that it is primitive economics to run after money changers.

He said, “I have read many things and  I heard last week about the Central Bank doing this and the EFCC controlling… Let’s not deceive ourselves. I don’t know any country where you use policemen to run after currency dealers. No it is not. It’s so archaic, so native and primitive. That is primitive economics.

“So, allow the market. If the exchange is in equilibrium, or you have a programme towards it, people will have confidence. There are different ways of dealing with inflation.”