An economic expert has called for a stronger focus on exchange rate stability rather than solely relying on interest rate adjustments to manage Nigeria’s economic challenges.
Speaking at a recent seminar on monetary policy and economic growth, Dr. Olumide Adebayo, an economist with extensive experience in global financial markets, emphasized that while interest rate changes are important tools, they are not sufficient on their own to address the country’s deeper economic issues.Dr. Adebayo argued that exchange rate stability is crucial for ensuring long-term economic growth, as fluctuations in the naira significantly impact inflation, foreign investment, and the cost of living for everyday Nigerians. He highlighted that unpredictable exchange rates create uncertainty in the market, making it harder for businesses to plan, especially those relying on imports or involved in export activities.
"Interest rate hikes may temporarily curb inflation, but without a stable exchange rate, we’re essentially kicking the can down the road. The real solution lies in building confidence in the naira and creating a more predictable and favorable environment for foreign investors and domestic entrepreneurs alike," Dr. Adebayo explained.
His comments come at a time when Nigeria’s central bank has been adjusting interest rates in an effort to tackle inflation and stabilize the economy. While some have supported these rate hikes as necessary to control inflation, others have raised concerns about their impact on the broader economy, particularly on borrowing costs and investment.
Dr. Adebayo further urged the government and the Central Bank of Nigeria (CBN) to consider policies that would encourage stronger economic fundamentals, such as enhancing local production, improving export strategies, and reducing the country’s dependence on imports.
Experts agree that fostering exchange rate stability through structural reforms, foreign exchange reserves management, and boosting confidence in the local currency will ultimately lead to better outcomes for the Nigerian economy. Dr. Adebayo’s stance adds to a growing call for more comprehensive solutions that go beyond traditional interest rate policies.
