CBN Takes More Knee-jerk Measures To Stop Naira Slide

The Central Bank of Nigeria has disclosed that the recent volatility experienced in the forex market is driven by speculators, vowing to take serious measures to curtail the trend.

Acting Governor of the CBN, Folasodun Sonubi, made this known after a closed-door meeting with President Tinubu in Aso Rock Presidential Villa, Abuja.

The CBN governor said the president is seriously concerned over the volatility in the forex market, saying the bank is on top of the situation to stop the naira from further devaluation.

According to the Acting CBN Governor, Shonubi part of the measures the apex bank is taking include sanctions against commercial banks involved in the illegal sale of forex.

The CBN boss also stated that the bank is trying to improve liquidity in both the I& E and parallel market in order to stop a further freefall of the naira.

Shonubi said: “Mr President is very concerned about some of the goings on in the foreign exchange market. One of the things we discussed is what could be done to stabilise and what could be done to improve the liquidity in the market and also the goings on in the various other markets, including the parallel market.

“He’s concerned about its impact on the average person, since, unfortunately, a lot of activities that we do, which are purely local, are still referenced to exchange rates in the parallel market.

“We’ve discussed and I’ve shared with him what we’re doing to improve supply. If you look at the official market, you’ll find that that market has been fairly stable and the spreads of the difference have not fluctuated as much.

“We do not believe that the changes going on in the parallel market are driven by pure economic demand and supply, but are touched by speculative demand from people.

“Some of the plans and strategies, which I’m not at liberty to share with you, means sooner rather than later, the speculators should be careful because we believe the things we’re doing, when they come to fruition, may result in significant losses to them.

“But my presence here is more about the concerns the President has and his needs to know that we are doing something about it, assurances of which I have given him totally.

“So I hope this helps. We are looking at it and we’re doing things that will significantly impact the market in a few days time and we will all see it.

“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.

The governor of the government-controlled bank spoke amidst concerns among not a few Nigerians that CBN has lost total control of the forex market, considering how the naira has lost value in the past few weeks.

The nation’s currency started falling to the dollar not long after the CBN ordered the convergence of both the parallel and I&E markets early in June this year, as part of its forex reforms policy.

The belief then was that the measure will improve liquidity and in turn, strengthens the naira.

But that’s not to be, as the measures, according to analysts appear to have been counterproductive, considering that the value of the naira to other foreign currencies continues to slide raising further concern about future stability.

Analysts have therefore warned that the value of the naira to the dollar could rise to as much as N1000 or more in a few weeks if serious measures are not taken by the monetary policy regulator to quickly arrest the trend, adding that the current CBN approach to the problem is another knee-jack measures that have not helped in the time past.