Atedo Peterside, the founder of Stanbic IBTC Bank plc, has expressed skepticism about the Nigerian Central Bank’s current strategies to stabilize the naira, specifically criticizing the sale of dollars to Bureau De Change (BDC) operators as ineffective. In a detailed discussion with Channels, Peterside provided insights into the ongoing currency challenges and offered his perspectives on potential solutions.
According to Peterside, the depreciation of the naira to N1500 against the dollar, which occurred this Thursday, is a normal market reaction and should have been anticipated by policymakers. He remarked that the previous government’s policies have significantly contributed to the current situation, and the present efforts are merely attempts at damage control rather than long-term solutions.
“The exchange rate problem was inherited from the previous government, and what they’ve been doing is to manage it,” Peterside explained. Initially, he had hoped for a more controlled approach to stabilize the naira around N1,300 to N1,400 per dollar. However, the Central Bank’s strategy to sell dollars to BDCs at N1,100, only for these operators to sell them at higher rates shortly after, has not resulted in the desired stability.
Peterside emphasized that maintaining the naira at a rate that the market can sustain is crucial. He argues that the recent rate of N1,500 to the dollar might reflect the currency’s actual value under current economic conditions, suggesting that this level should be maintained to build confidence in the market.
The Nigerian Autonomous Foreign Exchange Market saw the naira drop by 5% to N1533.99 to the dollar, according to data from FMDQ. This was in contrast to the official market’s rate of N1,459.02 the day before. The difficulties the Central Bank faces in attempting to regulate the exchange rate through direct interventions are highlighted by this volatility.
Peterside, a longtime voice against inefficient government practices, noted that the value of the naira at N1,500 is a result of both market forces and the previous administration’s excessive currency production. He criticized as excessively optimistic previous expert forecasts that the naira would stabilize at N700 to the US dollar.
Looking forward, Peterside stressed the importance of restoring investor confidence through consistent and rational government actions. He criticized the government’s spending on non-essential items and emphasized the need for a coherent strategy that aligns fiscal and monetary policies.
“What investors are looking for before investing their resources to reactivate the economy, is policy consistency,” he said. According to him, investor confidence can only be restored if the government demonstrates commitment to sound policies and avoids actions that could be perceived as irresponsible or frivolous.
