Achieving Exchange Rate Stability Targeting the 2010- 2015 Era for Economic Resilience

Abstract

The continuous fall in the value of Naira against foreign denominated assets is somewhat worrisome. Policy strategy is of essence to adjust the exchange rate to pre 2010 regime. Hence, this paper appraises the exchange rate policy measures, especially the most recent ones in addressing volatility in or national currency and restore equilibrium purchasing power. A stylized fact was deployed to draw inferences on the nuanced policy models pre and post 2010 regime. This study reported that, managed float mechanism sought to achieve exchange rate stability within upper and lower fluctuation margins. Whereas, flexible system, in operation now, allows the CBN to intervene in the market when necessary while upholding high levels of transparency and accountability. This has ensured that while the flexible exchange rate system is sustained, the exchange rate is prevented from excessive volatility. Therefore, mixture of flexible and partially interventionist policy is recommended. Keyword: Equilibrium, Exchange rate management, Trend analysis, macroeconomic policy.