Against the backdrop of the continued pressure on the Naira at the bi-weekly foreign exchange market,a situation which saw the Naira dropping to as low as between N159.52 and N160.90 to $1 in recent times, the Central Bank of Nigeria (CBN) has given indication that it would review its target band for the Naira. CBN Governor, Mallam Sanusi Lamido Sanusi hinted that the CBN would also maintain a high interest rate environment and that the monetary policy would remain firm for the foreseeable future to ward off inflationary pressures. Hitherto, the CBN policy has been to keep Naira exchange rate to the U.S. dollar within three percent on either side of the N150 per dollar level. However, with oil prices declining and local demand for imports surging, the CBN took measures to stabilise the currency by, among others, lowering the amount of dollars that banks could hold relative to shareholders' funds to one percent from five percent, and by aggressively raising interest rates by 2.75 percent to 12 percent. It is also planning to allow the Naira to exchange for the dollar at a band of N155 to N160 in order to maintain stability within the system without putting the foreign reserve position of the country at risk. With devaluation, more Naira will exchange for the U.S. dollar. Ideally, if Nigeria is a net exporter of goods and services, the devaluation would be more meaningful for the country. But, with oil and gas being Nigeria's major exports, the proposed devaluation would drive up the cost of imported goods. On its part, government will garner more Naira from the devaluation of the currency as more Naira would be needed to pay for the U.S. dollar. Thus, it would enable government to pay its new wage bill. But, it would make Nigerians poorer than before because of the expected increases in the cost of goods across the broad spectrum of the economy. As things are, devaluation is neither in the interest of the country nor is it the best option to take at this time especially in the light of the tight monetary policy already embarked upon by the CBN which will increase the cost of borrowing. In fact, the more import ' dependent the country is, the more unlikely it is for the Naira to increase in value. Therefore, the country would need to invest massively in agriculture, infrastructure and mining, among others, in order to diversify the economic base of the country so that it would be a net exporter of goods and services and also have enough accretion in its external reserves. Indeed, when countries that are not net exporters of goods and services are faced with problems like these, they take urgent steps to save their currencies and their economies. They cut their importation of unnecessary items such as exotic cars, luxury items and those food items that could be produced locally. In the present circumstances, this should be the way forward for Nigeria. The government must stop harmful import policies and aggressively encourage local production of such agricultural items to generate employment at home, achieve food security and garner foreign exchange from the export of agro-allied products. We also urge the Standards Organisation of Nigeria (SON) to be more alert to its duties by sanctioning erring factories that produce sub-standard products.The government as a matter of priority must revive the manufacturing sector to commence operations to optimum. Critical to this, the government must improve and stabilise power supply as part of provision of enabling environment for the private sector to thrive and manufacturing to get back up. For the proposed intervention to have a meaningful impact on society and ease the economic hardships for the country, CBN's current monetary polices must continue to align with the current realities in the economic sector and the society at large.
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