CBN Says No to Naira Devaluation, Blames Speculators

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  • CBN Says No to Naira Devaluation, Blames Speculators

The Central Bank of Nigeria (CBN) on Thursday said the available fundamentals do not support naira devaluation at this time as widely projected by market experts.

In a statement released on its website on Thursday and signed by Isaac Okorafor, the Director, Corporate Communications, CBN, the apex bank condemned the activities of speculators disrupting the foreign exchange market in recent days. Investors King had reported on Thursday that the US dollar/Naira exchange rate rose to N410 in some areas in Lagos. While JPMorgan and other market experts had projected that the central bank would devalue the local currency by at least 10 percent in the second quarter given low global oil prices and falling foreign exchange reserves.

The apex bank said: “The Central bank of Nigeria (CBN) wishes to note with displeasure, the rumours and speculative activities of unscrupulous players in the foreign exchange market, borne out of the impression that the CBN is on the verge of devaluing the Naira, and triggering panic in the FX Market.”

The CBN said these rumours are false and calculated to serve certain people’s selfish interests.

“For nearly four years, the CBN has successfully maintained relative stability in all segments of the foreign exchange market, which has enabled investors, households and other economic agents to plan and to conduct their genuine foreign exchange transactions with relative ease,” the central bank stated.

“The introduction of several foreign exchange management measures side-by-side with complementary interventions in food production and manufacturing has drastically reduced food importation, which hitherto constituted a large chunk of the pressure on the foreign exchange market.”

While admitting that the coronavirus outbreak has impacted the global economy, fall in oil prices, drop in capital importation into Nigeria, the health risk that led to widespread travel restrictions around the world, closure of factories in China and a substantial drop in imports, the apex bank said the nation’s foreign reserves is robust enough to sustain economic activities.

“The size of Nigeria’s foreign exchange reserves remains robust and comfortable, given the current realities of Nigeria’s genuine and legitimate FX demand. As such, the CBN remains able and willing to meet all genuine demand for foreign exchange for legitimate transactions.”

It said for the avoidance of doubt, the bank is also working with external consultants to devise tools to support and improve economic activities despite current global happenings.

“For the avoidance of doubt, the CBN is also working with the fiscal authorities to properly and accurately dimension the immediate and expected impacts of the Coronavirus in order to respond comprehensively and at the same time, ensure a sound and stable financial system conducive for job creation and inclusive growth.”

It added that “In light of current circumstances and macroeconomic fundamentals, the CBN has not devalued the Naira. Consequently, the CBN will invoke the full weight of applicable sanctions on any persons and authorized dealers found to be involved in such disruptive and speculative market behavior.”

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya

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