Kingsley Moghalu, a former presidential candidate has explained the value of the naira will fall from N570/$1 to N400/$1 at the parallel market if there is a massive rush of dollars into the Nigerian market through export earnings.
The former Deputy Governor of the Central Bank of Nigeria gave this explanation in a PUNCH Live Interview on Thursday.
Moghalu said, “The reason we have the prices we have is that the official rate is perceived by the market not to be the real rate; that’s the fundamental reason why you have a huge gap of N410 at the official rate – Investors and Exporters’ Window – and then N570 in the black market. That is unbelievable.
“Normally, you will have a gap between the official rate and the parallel market but in our time, we made sure that that gap was not a lot – it wasn’t more than N10, N15, max N20.
“What is happening now shows that there is a very fundamental crisis in the Nigerian economy. And unfortunately, the economy does not respond to political commands, the economy does not respond to political statements, the economy does not respond to military orders; the market responds to its own dynamics – demand and supply.
“If you have a massive rush of dollars into the Nigerian market today, the price of the dollar would crash and the naira can come to N400 in the black market, you may be shocked.
“So, it is about going to fix what would bring in the quantity of dollars that would rebalance the equation.”