Nigeria’s apex bank gets President’s approval to move against sliding Naira as the economy worsens
Nigeria’s central bank plans to take measures that will impact currency markets in a few days time, its acting governor said on Monday, after meeting President Bola Tinubu to discuss ways to improve dollar liquidity on the official market.
Acting central bank governor Folashodun Shonubi’s meeting with Tinubu comes after the bank on Friday revealed a $19 billion commitment in derivatives in 2022, nearly the size of the country’s reserves.
Africa’s largest economy is looking for ways to shore up its reserves and stem the fall of its currency, which has hit record lows on the black markets two months after trading restrictions were loosened on the official market.
Shonubi did not disclose the measures.
“All segments are now collapsed into the Investors and Exporters (I&E) window. Applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks,” the CBN said in a statement.
“Mr. President is very concerned about some of the goings on in the foreign exchange market. One of the things we discussed were, what could be done to stabilize and what could be done to improve the liquidity in the market and also the goings on in the various other markets including the parallel market.
“He is concerned about its impact on the average person, since, unfortunately a lot of activities that we do, which are purely local are still referenced to the exchange rates in the parallel markets.
“We have discussed and shared with him what we’re doing to improve supply. If you look at the official market, you will find that that market has been fairly stable and the spreads of the difference are not fluctuated as much.
“We do not believe that the changes going on in the parallel market are driven by pure economic demand and supply but are topped by speculative demand from people.
“Some of the plans and strategies which I’m not at liberty to share with you, means sooner rather than later, the speculators should be careful, because we believe the things we’re doing when they come to fruition may result in significant losses to them.”
The CBN acting governor said that the measure would not only ensure the environment operates at a level that’s more efficient, but also reduce the negative impact on the economy and on the lives of the average person.
Exchange rates are constantly moving, based on supply and demand.
Whether one currency is in higher demand than another, depends on the perceived value of owning it, either to pay for goods and services, or as an investment.
Currently the dollar exchange for N950 in black market, while the official window go for N940.
Additional Reports From Reuters/NAN