Dayo Omoogun
The Central Bank of Nigeria (CBN) has clarified that there is no cause for alarm in response to speculations in the public domain suggesting that the Nigerian Currency may be devalued.
The apex bank stated that considering current market indices there is no need to panic or entertain any fear whatsoever.
“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.
These rumours are false, unwarranted and calculated to serve their dubious and selfish ends.”
The apex bank in the press release titled Market Fundamentals Do Not Support Naira Devaluation at This Time, listed some of the factors which support its stance to include: the robust size of the nation’s foreign exchange reserves, the bank’s various interventions in the agricultural sector which have led to drastic reduction in the food import bill and the relative stability of the forex market over the last few years.
“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”
“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 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 bank explained that while the corona virus outbreak has forced an economic lull leading to reduced dollar inflow, the drop has also largely being compensated for by instigating a lower demand for forex.
“Although the outbreak of the Coronavirus 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”
“In light of current circumstances and macroeconomic fundamentals, the CBN has not devalued the Naira.”
It warned that rumour mongers and speculators would be dealt with.
“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.”