In response to the recent depreciation of the naira in the parallel market, the Central Bank of Nigeria (CBN) has taken decisive steps to counter the activities of currency speculators and stabilize the foreign exchange markets. Acting Governor of the CBN, Folashodun Shonubi, revealed this strategy during a press briefing held at the Presidential Villa after conferring with President Bola Tinubu.
Concerned about the ramifications of the ongoing developments in the foreign exchange market, President Tinubu expressed his worry over the potential impact on ordinary citizens. Shonubi emphasized that the naira’s instability in the parallel market is not solely attributed to economic factors, but also driven by speculative demand.
While the specifics of the intervention measures were not divulged, Shonubi issued a stern warning to currency speculators, indicating that the upcoming measures could lead to significant losses for them. His presence at the Presidential Villa aimed to assure President Tinubu that the CBN is taking decisive actions to address the situation.
Shonubi expressed confidence that the implemented measures will yield positive results in the near future. The CBN’s ultimate goal is to establish an efficient and balanced operating environment that minimizes adverse impacts on the average Nigerian’s daily life.
“The intention is to ensure the environment operates at a level that’s more efficient, but also that is also very reasonable and does not have a negative impact to the best that we can on the lives of the average person,” Shonubi affirmed.
Additionally, The PUNCH newspaper uncovered that the CBN has initiated measures to alleviate pressure on the naira in the parallel market. A recent circular signed by the Director of the Trade and Exchange Department, CBN, Ozoemena Nnaji, imposed limits on the exchange rate for naira payout of Diaspora remittances. The circular directs that naira payments for remittances be conducted within a range of -2.5% to +2.5% of the previous day’s average rate on the Investors’ and Exporters’ window.
This step comes after Shonubi previously indicated that the diversion of Diaspora remittances to the parallel market was contributing to the naira’s stress. As the CBN continues to strive for a more efficient and effective forex market, it aims to address the challenges posed by high dollar demand.
Despite these actions, concerns linger over the sufficiency of Nigeria’s external reserves to support liquidity in the foreign exchange market. Experts believe that additional interventions and strategies will be essential to counteract the downward pressure on the naira and ensure more stability in the forex market.