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Naira is Undervalued, No Need for Devaluation – Emir Sanusi

The Emir of Kano, Muhammadu Sanusi II, has stated that the Nigerian naira is undervalued at N300 per dollar.

“My public position is that if the Central Bank can improve on its management of foreign exchange, provide liquidity to the parallel market, get a convergence between the BDC rate and the official rate, also keep these yields where they are, that will help to attract the foreign exchange that we need to stabilize in the short term,” he said according to Daily Trust.

“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.”

The naira currently exchanges at 455, 545 and 495 to the dollar, pound and euro at the parallel market.

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