Selfish market forces responsible for panic, says CBN as naira trades at N400/$

The Central Bank of Nigeria (CBN) says the recent downward movement of the naira against the dollar in the forex market is caused by speculations that the currency will be devalued.

In a statement signed by Isaac Okorafor, CBN’s director of corporate communications, the apex bank said it is willing and able to meet all genuine demand for legitimate transactions.

“The Central bank of Nigeria (CBN) wishes to note with displeasure, the rumours and speculative activities of unscrupulous players in the foreign exchange market, borne out of the impression that the CBN is on the verge of devaluing the naira, and triggering panic in the FX market,” the statement read.

“These rumours are false, unwarranted and calculated to serve their dubious and selfish ends.

“We have begun a robust and coordinated investigation in collaboration with the Nigerian Financial Intelligence Unit (NFIU) and related agencies to uncover the unscrupulous persons and FX dealers who are creating this panic, and the full weight of our rules and regulations will be meted out to them, including, but not limited to, being charged for economic sabotage.”

According to the CBN, the introduction of foreign exchange management measures side-by-side with complementary interventions in food production and manufacturing has “drastically reduced food importation” which it said made up a large chunk of the pressure on the foreign exchange market.

“Although the outbreak of the coronavirus led to a global economic slowdown, fall in the price of crude oil, and less inflow of dollars into Nigeria, the associated public health concerns have also led to factory closures in China, substantial drop in imports, widespread travel restrictions around the world, and cancellation of many conferences, sporting events, business travels, and FX orders;

“The size of Nigeria’s foreign exchange reserves remains robust and comfortable, given the current realities of Nigeria’s genuine and legitimate FX demand. As such, the CBN remains able and willing to meet all genuine demand for foreign exchange for legitimate transactions.”

The CBN said it is already working with fiscal authorities to accurately measure the impacts of coronavirus and come up with an action plan to “ensure a sound and stable financial system conducive for job creation and inclusive growth”.

“In light of current circumstances and macroeconomic fundamentals, the CBN has not devalued the naira. Consequently, the CBN will invoke the full weight of applicable sanctions on any persons and authorized dealers found to be involved in such disruptive and speculative market behaviour,” it said.

TheCable had reported on Wednesday that forex dealers had begun buying dollars in panic resulting in the naira exchanging at N375 to the dollar.

On Thursday, the naira exchanged at N400 to the dollar at some bureaux de change in Lagos.