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CBN: Redesigning naira may worsen forex crisis – Moghalu identifies dangers

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A former presidential aspirant of the African Democratic Congress, Kingsley Moghalu, has said the redesigning of the naira notes may not curb inflation in Nigeria.

Moghalu said the redesigning of the naira notes may worsen the forex crisis in Nigeria.

In a set of tweets, the earlier presidential candidate, nonetheless, backed the redesigning of the naira by the Central Bank of Nigeria, CBN.

Moghalu said it is troubling that 80 p.c of the Nigerian currencies in circulation are open air the banks.

He said the apex monetary establishment must be determined to energy these notes once more into the banking system.

He tweeted: “I completely help the @cenbank redesign of the Naira. If 80% of banknotes in circulation are open air the banks, that’s troubling. The CBN clearly needs to energy all these notes once more into the banking system. Those with the notes ought to give as much as get new ones or else it turns into illegal tender after January 31 2023.

“This is usually a choice to withdraw forex from circulation, an unorthodox technique of tightening the money present as a result of the nation is battling extreme inflation. The flip side is that individuals who discover themselves holding giant portions of cash open air the banking system for nefarious causes will go into the parallel forex market to buy laborious forex, inserting extra downward pressure on the price of the Naira as an extreme quantity of Naira could be chasing too few {{dollars}}.

“I doubt it will treatment inflation because of there are additionally completely different important causes for inflation such as a result of the forex crisis, which this new switch would possibly exacerbate, as correctly the impression of the security crisis on meals value inflation. But basic it is a compulsory step.

“I just think the time window for its implementation is rather short. This will put a lot of operational pressure on commercial banks and the financial system in general. A 90 day window would have been better, but one can understand the need to avoid interfering with the elections.”

CBN: Redesigning naira may worsen forex crisis – Moghalu identifies dangers

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