NAIRA SHRUGS OFF CBN’S INTERVENTION, DIPS TO 1510/$

Recent market statistics have shown the Naira to be fighting back against the CBN’s intervention, now trading at N1510. A few months ago, the Naira hit an all-time low against the dollar, trading for over 1500 for the first time before the CBN intervened and the local currency began to buck its trend. Recent developments, however, indicate that the Naira has defied CBN’s measures and intervention.

Naira has, in recent times, firmed up against the dollar following a string of reforms and interventions by the Central Bank of Nigeria (CBN). On Thursday and Friday, the dollar-to-naira exchange rate increased by N40, after closing earlier at N1,426 to a dollar, according to the National Autonomous Foreign Exchange Market (NAFEM).

According to ABCON president, Aminu Gwadabe, speaking on Sunday to Daily Trust, it was unfortunate that recent reforms and interventions by the Central Bank of Nigeria had been reversed. “There is a need for amnesty. A lot of people still have dollars in their houses. It is a crisis and stormy period. Sometimes we would not just remain at maximum compliance, voluntary compliance is key to effective regulations’

Among the other reforms undertaken by the CBN were the substantial clearing of foreign exchange backlog, the release of airlines’ trapped funds, and the raids on unregistered businesses operating as foreign currency exchange companies.

It should be noted that despite the interventions, the crisis persists, with Bloomberg rating the Nigerian naira as the worst-performing currency in the world over the last month.

According to an expert opinion, the Chief Executive Officer, Centre for the Promotion of Private Enterprise, says ‘all the intervention of the CBN amounts to just treating the issue at a surface level and not actually addressing the real issue’ which is to increase the supply of dollars.

From an unfortunate turn of event it is important to admonish anyone still hoarding dollars in large quantities to sell and increase the supply of the dollar hereby forcing the demand to reduce.

In order to achieve a stable market, it is important for measures to be taken that have a lasting impact on the exchange rate. A volatile exchange rate can be detrimental to the economy and not beneficial for businesses. We hope that in the near future, stronger and more effective measures will be implemented to ensure a stable and favourable exchange rate. This will create a more conducive environment for both the economy and businesses to thrive in.