Free naira floating may hurt consumers, CBN warned

As the Central Bank of Nigeria (CBN) grapples with the twin challenge of depleting external reserves and defending the naira, the Senior Research Analyst at FXTM Global, Mr. Lukman Otunuga, has said a free float of the naira will hurt consumers at this time. Speaking via a zoom meeting, Mr. Otunuga said, “If CBN allows […]

As the Central Bank of Nigeria (CBN) grapples with the twin challenge of depleting external reserves and defending the naira, the Senior Research Analyst at FXTM Global, Mr. Lukman Otunuga, has said a free float of the naira will hurt consumers at this time.

Speaking via a zoom meeting, Mr. Otunuga said, “If CBN allows a free float of the naira, it will hurt the economy; it will do more damage than good.”

He said COVID-19 had exposed the economy to a massive downside shock, but added that the oil prices could rebound on vaccine hopes and noted that Nigeria’s economy could receive some support from the rise in the price of gold.

Presenting Nigeria’s macro-economic outlook for 2020 and beyond during a virtual meeting with journalists yesterday, Otunuga who spoke from the United Kingdom, based his points on some positive developments in the gold sub-sector of the nation’s economy.

“Nigeria refined its own reserve gold bar and paid N268m for the 12.5kg bar to start a central bank stock.”

He further said the development in the gold sub-sector was encouraging diversification of the national economy, adding that the newly regulated gold mining sub-sector was expected to create about 250,000 new jobs in the country.

The FXTM analyst also stated that Nigeria might record an estimated $1.8b economic loss from the 12 days #EndSARS protest.

While projecting that Nigeria’s economic growth could expand to 1.7 per cent in 2021, Otunuga stressed that economic diversification and infrastructure development were key for the transformation of the country.