The Central Bank of Nigeria (CBN) yesterday said current market realities do not warrant devaluation of the Naira. The apex bank made this clarification in response to rumours and speculations that it was on the verge of devaluing the Naira, a situation that has triggering panic in the foreign exchange market.
There had been speculation that the authorities were contemplating a devaluation of the local currency following the outbreak of coronavirus (COVID 19) and its resultant effect on oil price fall by over 38 percent.
The CBN, in a statement last night said the rumours are false, unwarranted and calculated to serve their (rumour mongers) dubious and selfish ends.
“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 authorised dealers found to be involved in such disruptive and speculative market behavior,” the CBN said.
The Central Bank said it has begun a robust and coordinated investigation in collaboration with the Nigerian Financial Intelligence Unit (NFIU) and related agencies to uncover the unscrupulous persons and FX dealers who are creating the panic. It threatened that ‘the full weight of our rules and regulations will be meted out to them, including, but not limited to, being charged for economic sabotage.”
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 Bank noted that 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.
The outbreak of the Coronavirus has led to global economic slowdown, fall in the price of crude oil and less inflow of dollars into Nigeria. The associated public health concerns have also led to factory closures in China, substantial drop in imports, widespread travel restrictions around the world, and cancellation of many conferences, sporting events, business travels, and FX orders.
“The size of Nigeria’s foreign exchange reserves remains robust and comfortable, given the current realities of Nigeria’s genuine and legitimate FX demand,” the CBN said, adding that as such, “the CBN remains able and willing to meet all genuine demand for foreign exchange for legitimate transactions.”
The Central Bank said it 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.
