Inflation: Experts Urge CBN To Adopt Flexible Exchange Rate

The Central Bank of Nigeria (CBN) has been urged by financial experts to adopt a flexible foreign exchange rate regime and address the food insecurity triggering the inflationary rate in the country.

The experts said this in separate interviews with the News Agency of Nigeria (NAN) on Tuesday in Lagos.

The Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said the unstable foreign exchange rate regime is partly responsible for the rise in the inflation rate.

“The monetary authorities should initiate a flexible exchange rate to ensure forces of demand and supply determine the real value of the currency.

“This approach is imperative because it will spur the inflow of foreign direct investment and enhance liquidity in the economy,” Yusuf said.

According to him, the CBN ways and means of intervention is another factor triggering inflation.

“The apex bank has voted about N20 trillion to fund the Federal Government deficit finances over time.

“This approach is used by the government due to the fiscal challenges, but it’s worsening the rise in inflation rate in the economy,” he said.

Also speaking, the founder, the Independent Shareholders Association of Nigeria (ISAN), Sunny Nwosu, attributed the rising inflation rate to food insecurity.

“The inadequate food products caused by insecurity in many farming communities coupled with the increase in prices of petroleum products in recent times.

“The high cost of food production is passed to the final consumers who are already overwhelmed with the tough economy,” Nwosu said.

He urged the Federal Government to check the inflation rate by supporting local industries to boost production.

The former Director of CBN, Titus Okurounmi, said the Federal Government should initiate macroeconomic policies geared at enhancing the productive sector.

Okurounmi added that the three tiers of government must put in more effort to improve food production to attain food security.

“The need to adopt more mechanised agriculture practice is imperative to enhance food supplies and reduce cost.

“The inflation rate driven by the increase in food prices will begin to abate particularly basic staples,” Okurounmi said.