Managing a Liberalised Exchange Rate System in Nigeria: Lessons from Indonesia

Abstract

This paper examines Indonesia's exchange rate management experience following the 1997/1998 Asian financial crisis to draw useful  lessons for Nigeria's recent transition to a liberalised exchange rate regime. It describes one of Nigeria's historical exchange rate policy  challenges, emphasising the role of rent-seeking behaviour and corruption. Drawing on Indonesia's successful adoption of a floating  exchange rate regime, the paper highlights vital lessons Nigeria can learn, such as central bank independence, a managed floating  exchange rate regime, and effective foreign exchange supply and demand management. The analysis also underscores the importance  of private sector engagement with the central bank for sustainable exchange rates and macroeconomic stability.