By Chibuike Nwabuko
ABUJA (PRECISE POST) – Former Anambra State Governor, Willie Obiano, has said that the stability of a country’s currency cannot be achieved through the efforts of the central bank alone, stressing the importance of a strong and productive domestic economy.
Obiano stated this while reacting to pressures confronting the Ugandan shilling, Ghanaian cedi and Zambian kwacha, noting that developments in the three currencies offered a broader lesson on the factors that determine exchange-rate stability.
According to him, while external economic shocks can exert significant pressure on national currencies, domestic economic fundamentals also play a critical role in determining how resilient a currency remains in the face of global and local pressures.
He identified imports, export earnings, foreign-exchange reserves, fiscal credibility and the capacity of domestic businesses to generate foreign exchange as some of the major factors that influence currency stability.
Obiano argued that excessive dependence on imports can increase demand for foreign currency, thereby putting pressure on domestic currencies, particularly in economies with limited foreign-exchange earnings.
He also stressed the importance of strengthening export capacity, noting that a productive economy capable of generating foreign exchange is better positioned to withstand external shocks and reduce pressure on its currency.
The former governor further linked currency stability to the credibility of a country’s fiscal management, suggesting that sound fiscal policies and adequate reserves can contribute to economic resilience and investor confidence.
He cautioned against viewing exchange-rate challenges purely as monetary-policy problems that can be solved by central banks through interventions in the foreign-exchange market.
While acknowledging the role of central banks in managing volatility and responding to currency pressures, Obiano said monetary authorities could not substitute for weaknesses in the productive sector.
“A resilient currency ultimately rests on a resilient productive economy. Central banks can manage volatility. They cannot manufacture competitiveness,” he said.
Obiano’s remarks place the issue of exchange-rate stability within the wider context of production, trade and economic competitiveness.
His position suggests that sustainable currency stability requires an economy capable of producing goods and services for both domestic consumption and export, while generating sufficient foreign exchange to meet legitimate external obligations.
The former governor’s comments also highlight the relationship between a country’s import bill and its ability to earn foreign exchange through exports and other sustainable sources.
Where foreign-exchange demand consistently outpaces supply, currencies can come under pressure, particularly when external conditions such as commodity-price movements, global interest rates or capital-flow changes add to existing domestic vulnerabilities.
Obiano therefore emphasised the need for policymakers to look beyond short-term exchange-rate interventions and address the structural factors affecting foreign-exchange supply and economic competitiveness.
His remarks come amid continuing debates across African economies over currency depreciation, inflation, foreign-exchange availability and the measures required to strengthen domestic production.
The former Anambra governor maintained that the ultimate foundation for currency resilience is the strength of the economy that supports it, rather than the capacity of monetary authorities to intervene whenever pressure emerges in the foreign-exchange market.
The message, he stressed, is that currency stability and economic productivity are closely interconnected, with sustainable competitiveness requiring businesses and productive sectors capable of earning foreign exchange and reducing excessive dependence on imports.
