CBN plans new measures to stabilise naira, says speculators may incur losses

The Central Bank of Nigeria (CBN) says new measures will be taken to stabilise the naira against the dollar.

Folasodun Sonubi, acting governor of the CBN, spoke with journalists after a meeting with President Bola Tinubu in Abuja on Monday.

Sonubi said Tinubu was worried about the consistent fall of the naira against the dollar, hence efforts would be made to curb the situation.

The acting CBN governor said the fluctuations in the parallel market are not solely driven by economic factors, but also speculative demand.

While he did not disclose the planned measures, Sonubi warned speculators that the CBN’s upcoming initiatives could potentially lead to significant losses for them.

He also said the measures, when implemented, would yield positive outcomes within a few days.

“Mr. President is very concerned about some of the goings on in the foreign exchange market,” he said.

“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 have discussed and I have shared with him what we’re doing to improve supply. If you look at the official market, you will 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 am 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.

“We are doing things which 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 CBN had in June 2023 announced the unification of all segments of the foreign exchange (FX) market, signalling the end of its control of the forex market.

Since the decision — which was in compliance with the federal government’s directive — the exchange rate of the local currency has been determined by market forces.

Last week, the naira fell to an all-time low of N950 to the dollar at the parallel market.