CBN says weakening Naira fueled by speculative demand
...assures measures on course to restore value of currency
The Central Bank of Nigeria (CBN) Friday tried to douse tension over the weakening naira, assuring that efforts are underway to quickly restore the value of the local currency which has recently been on a free fall, particularly at the parallel market.
The CBN, which has already taken some policy measures in this regard, including its RT200 FX Programme and the Naira4Dollar rebate scheme, also blamed speculators for the continued fall of the local currency, apart from obvious external pressures.
The assurances came two days after Naira, Nigeria’s currency on Wednesday fell to the lowest ever, depreciating to N710 per dollar at the parallel market as demand from Nigerians who convert dollars as a store of value spiked amid the short supply of the greenback.
In a statement, the CBN advised Nigerians to resist the urge of succumbing to the speculative activities of some players in the foreign exchange market.
Osita Nwanisobi, Director, CBN’s Corporate Communications department said the apex bank remains committed to resolving the foreign exchange issues confronting the nation and has been working to manage both the demand and supply side challenges.
He admitted that there was a huge demand pressure for foreign exchange to meet the needs of manufacturers as well as those for the payment of tuition, medical fees and other Invisibles, noting how concerned the CBN was about the international value of the naira.
He added that the monetary authority is strategizing to help Nigeria earn more stable and sustainable inflows of foreign exchange in the face of dwindling inflows from the oil sector.
Specifically, he pointed to recent initiatives by the CBN such as the RT200 FX Programme and the Naira4Dollar rebate scheme, which have so far helped to increase foreign exchange inflow to the country.
“The Bank’s records showed that foreign exchange inflow through the RT200 FX Programme in the first and second quarters of 2022 increased significantly to about US$600 million as of June 2022,” Nwanisobi stated.
He further disclosed that the Naira4Dollar incentive equally increased the volume of Diaspora remittances during the first half of the year.
Interventions such as the 100 for 100 Policy on Production and Productivity, Anchor Borrowers’ Programme (ABP) and the Non-Oil Export Stimulation Facility (NESF), among others, are also geared towards diversifying the economy, enhancing the inflow of foreign exchange, Stimulating production and reducing foreign exchange demand pressure, he stressed.
Nwanisobi, therefore, assured that the Bank would continue to make a deliberate effort in the foreign exchange sector to avert further downward slide of the naira, which he insisted is fuelled by speculative tendencies.
Reiterating an earlier position of the CBN Governor, Godwin Emefiele, he urged Nigerians to also help the Monetary authority’s efforts by adjusting their consumption patterns, looking inwards and finding innovative solutions to the country’s challenges.
He said such has become necessary since the Monetary policy cannot bear all the burden of the expected adjustments needed to manage the challenges around Nigeria’s foreign exchange.
“It’s our collective duty as Nigerians to shore up the value of the Naira,” he stated.