The Central Bank of Nigeria under the directive of President Bola Tinubu moves to stabilize the Naira. This coming some days after the Naira has greatly depreciated. In August, the naira is trading at the rate of 950 naira against 1 dollar.
Seeing the speed with which the Nigerian currency is depreciating, President Tinubu has called the acting CBN Governor to a meeting. They have discussed way to make the naira strong so as to prevent further depreciation and lost of value.
According to the CBN, the naira depreciates faster because Nigerians prefer sending money through black market route than the official and international exchange or foreign exchange market in Nigeria. In addition, the number of Nigerians needing the dollar is way higher than the number of dollars in circulation in Nigeria. Demand is higher than supply, thus the increase in price.
Central Bank of Nigeria under the Directive of President Bola Tinubu Moves to Stabilize the Naira
The Central Bank of Nigeria has said it is set to take new measures to stabilize the naira against the dollar.
Acting Governor of the CBN, Folasodun Sonubi, disclosed this to State House Correspondents after briefing President Bola Tinubu on the bank’s plan to halt the slide on Monday at the State House.
He said President Tinubu expressed his concern about the impact of recent developments in the foreign exchange market, particularly on ordinary citizens.
The acting CBN Governor 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 stabilize, 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 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.”
This is it about this topic of Central Bank of Nigeria under the directive of President Bola Tinubu moves to stabilize the Naira. Will this new way, method, and procedure of the CBN Governor work out? Well …
It is not going to increase the value of the naira astronomically. It is only going to halt temporarily the fast slide of the naira–the depreciation rate. However, naira would still be affected negatively with the demand for dollars and foreign currencies being higher than supply.