Market Fundamentals Do Not Support Naira Devaluation at This Time.
The Central Bank of Nigeria (CBN) has noted 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.
This coming on the heels of stomach-churning market drops and growing recession talk of the past few weeks – triggered by the global spread of the coronavirus.
In a statement titled, “Market Fundamentals Do Not Support Naira Devaluation at This Time,” dated March 12, 2020 signed by the apex bank’s Director, Corporate Communication, Isaac Okorafor, the banking public is advised that, “these rumours are false, unwarranted and calculated to serve their dubious and selfish ends.”
The CBN had given a go-ahead to the Nigerian Financial Intelligence Unit (NFIU) and related agencies to uncover the unscrupulous persons and FX dealers who were creating the panic, promising to serve them the full weight of the law, including, but not limited to, being charged for economic sabotage.
Markets across the have been shocked by global economic slowdown, fall in the price of crude oil, and less inflow of dollars into Nigeria, while 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.
Wall Street briefly pared its losses on Thursday as investors reacted to the Federal Reserve’s announcement that it would dramatically increase liquidity by injecting as much as $1.5 trillion into the US economy with an unprecedented series of asset purchases.
Further, the statement assurances that the CBN was working “with the fiscal authorities to properly and accurately dimension the immediate and expected impacts of the Coronavirus in order to respond comprehensively and at the same time, ensure a sound and stable financial system conducive for job creation and inclusive growth.”
It assured Nigerians and investors that, “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.”
“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 behavior.”
Picture: Central Bank Governor, Godwin Emefiele