The Emir of KanoSanusi Lamido Sanusi, has revealed why the Nigerian currency is currently undervalued.

 The former Governor of the Central Bank of Nigeria, in an interview with Daily Trust on his recent visit to Washington DC to deliver a keynote address at the World Bank and Islamic Financial Services Board High-Level Seminar on Islamic Finance, said the exchange rate is where it’s supposed to be.

He said: “While I think the naira is undervalued, certainly if you look at the purchasing .......
power parity, when you look at the nominal exchange rates, when you look at the rate of inflation, it stands to agree that even at 300 the naira will be slightly undervalued.

Fundamentally, I think the exchange rate is where it’s supposed to be. What is obviously the problem, is not the fundamentals, it is the managing of the regime, so that people will have the confidence that we are indeed having a flexible exchange regime and also that we are closing the gap between the official and the parallel market rates, and that could only happen when we have liquidity within that segment. 

Speaking further, Sanusi said: “The Central Bank decided not to sell forex to BDCs but there is no liquidity. What you said is for N470-490 to the dollar might be a very small volume in transactions but it does have the impact of creating the impression that it creates a huge gap. So if we could just provide liquidity to that segment and close that gap it will help a lot. But in terms of where the naira is today, there is no need for any further devaluation as far as the fundamentals are concerned but we have to take steps to address confidence. We spent one year defending an exchange rate regime that everybody knew would not work.

It has been tried by Chavez in Venezuela, tried by Mugabe in Zimbabwe and Rawlings in Ghana, it never works so everybody knows it will not work for Nigeria, unless oil prices miraculously rebounded. So the real issue is the confidence issue, which is convincing the world that we had an error in the past and it has been corrected now.”

Meanwhile, the Emir of Kano has denied that he ever attacked President Muhammadu Buhari over the state of the economy. He said: “My attention has been drawn to a set of quotes attributed to me attacking the government of General Buhari and his party and praising opposition party, I do not know who is behind these quotes.”