The Governor of Nigeria’s Central Bank has announced plans for what are the most significant changes in years to the management of the Nigerian currency, the Naira. The Governor, Charles Soludo made the announcement at a recent conference held by the Central bank on the ‘Strategic Agenda for the Naira’.

The changes planned will focus on several major areas. Most significant of these are the redenomination of the Naira, making the Naira a freely convertible currency by 2009 and the distribution of national income amongst the states in dollars.

The redenomination of the Naira planned for 2008 will have the Naira change from a current rate of about $1 to 125 Naira to a $1 to 1.25 Naira. The exercise will see the scrapping of the 100, 200, 500 and 1000 Naira notes. Soludo said the change was designed to better anchor inflationary expectations, strengthen public confidence in the Naira, make for easier conversion to other currencies, reverse tendency for currency substitution, eliminate lower value and reduce cost of production, among others.

Analysts have welcomed the changes and believe they would help increase the flow of money into the banking system and encourage investment in Nigeria.