The Central Bank of Nigeria (CBN) has said that the recent appreciation of the Naira against other currencies was the result of its market monitoring and intervention.
The acting Director, Corporate Communications of the CBN, Mr. Isaac Okoroafor on Thursday in Sokoto, refuted the claim that illegal sales of foreign currencies at ridiculous rates was responsible for the change in Forex policy.
Okoroafor also explained that appreciation of the Naira was in no way connected to the allegations of illegal sale of foreign currencies.
“I want to state categorically that there is no relationship whatsoever between the allegations that dollar was being sold at 61 kobo and the current appreciation of the Naira.
“What led to the appreciation of the Naira was that the CBN did an intelligent work on the market and realised that what was driving the demand on the Bureau De Change (BDCs) and parallel market was speculation.
“We reasoned that since there is a lot of pressure on the two segments from people seeking to buy foreign currencies for BTA, tuition and medicals, that if we successfully address that, the pressure will come down.
“Also, before now, the level of our reserves was not enough to make us comfortable enough to really do the kind of intervention that is required.
“We decided to do so now because we are a bit more comfortable with our level of reserve,” he said.
Okoroafor said that since the new Forex policy, the CBN had intervened with about 591 million dollars in the market, which had led to Naira gaining strength.
“Let me also state as proof that when we placed 500 million dollars in the market, only 370 million dollars was taken.
“That tells you that the real demand is 370 million dollars. When we placed 230 million dollars in the market, only 221 million dollars was taken.
“Anybody who has gone foul of the law and the security agencies have caught up with him, should go and face his or her case and stop causing confusion among participants in the market,” he said.
Expert urges CBN to reduce interest rate
A financial analyst, Mr. Emmanuel Eze, on Thursday advised the Central Bank of Nigeria (CBN) to reduce the current interest rate to further strengthen the naira.
Eze, Chief Executive Officer, Perfecter Investment Trust, Lagos told the News Agency of Nigeria (NAN) in Lagos that it would also force down the inflationary rate.
NAN reports that the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC), had in January voted to hold benchmark interest rate at 14 per cent.
It also retained the Cash Reserve Ratio (CRR) and liquidity ratio at 22.5 per cent and 30 per cent respectively.
The apex bank, which adopted the current rate since July 2016, has maintained all rates through 2016 and into 2017.
Eze said that a reduced interest rate would aid the productive sector of the economy.
“Boosting the productive sector and granting more attention to agriculture and its value chain will position the economy on the part of growth.
“The CBN must now look at other issues militating against the economy.
“One of which is the high interest rate, which must be tackled to strengthen the naira against other major currencies,” the expert said.
He said that the current peace in the Niger Delta region should not be ignored in view of the rising price of crude at the international market.
Eze said that the steady appreciation of oil price and increase in output were parts of the panacea that would ameliorate the foreign exchange challenges.
“The marginal appreciation of crude at the international market has also brought marginal foreign exchange liquidity that enabled the CBN to intervene in forex challenges.
“Since high pricing is equal to more foreign exchange availability, government should negotiate more with various stakeholders in Niger Delta to ensure that there is permanent peace in order to have increase oil output.
“Steady peace and mutual respect are parts of what will create the necessary ambiance that will increase the volume of oil output and pull the country out of the current economic predicament,” he said.
NAN reports that since the apex bank directed banks to create more outlets for forex due to availability of liquidity, the naira has rebounded to exchange for N303 to the dollar at the official rate.