By John Ikani
In a move to counter the decline of the naira on the parallel market, also known as the black market, the Central Bank of Nigeria (CBN) on Monday said it is introducing fresh measures to curb the activities of currency speculators.
Folashodun Shonubi, the Acting Governor of the CBN, revealed this to State House correspondents at the Presidential Villa after briefing President Bola Tinubu on the bank’s efforts to halt the naira’s decline.
According to Shonubi, President Tinubu expressed his worry about the impact of recent foreign exchange market developments, particularly on ordinary citizens.
He also highlighted that the instability of the naira in the parallel market is not solely due to economic factors but also speculative demand.
Although the acting CBN governor, refrained from disclosing specific details of the proposed intervention strategies, he cautioned speculators about potential significant losses resulting from these measures.
While noting that his visit to the Presidential Villa aimed to assure the president that the CBN was taking decisive action to address concerns, Shonubi
expressed confidence that the implemented measures would yield positive results within a few days.
He further stated that the CBN’s main objective is to establish an efficient and reasonable operational environment that minimizes adverse effects on the average Nigerian.
What the CBN is saying
Shonubu explained, “Mr. President is deeply concerned about some occurrences in the foreign exchange market. We discussed how to stabilize and enhance market liquidity, including the parallel market. He’s worried about its impact on regular citizens since many local activities are still linked to parallel market exchange rates.”
“We’ve deliberated, and I’ve shared our efforts to enhance supply. The official market has been relatively stable, with consistent spreads. We believe the changes in the parallel market aren’t solely due to economic supply and demand but are influenced by speculation,” he added.
“Some of the strategies I can’t disclose yet mean that speculators should be cautious. Our actions may lead to substantial losses for them. However, my presence here is about addressing the President’s concerns and assuring him of our actions, which I’ve completely done.”
“I hope this clarifies. We’re taking steps that will significantly impact the market in a few days, which will become evident. Our aim is to create an environment that’s more efficient and reasonable, without negatively affecting the lives of ordinary people.”
As part of the fresh measures, the CBN issued a circular to authorized dealers, international money transfer operators, and the public.
The circular, signed by CBN’s Director of Trade and Exchange Department, Ozoemena Nnaji, establishes limits on the naira payout exchange rate for Diaspora remittances.
The CBN directed that the naira payment for Diaspora remittances should stay within -2.5% to +2.5% of the previous day’s average rate on the Investors’ and Exporters’ window.
The circular states: “Following the circular dated July 10, 2023, and meetings with banks and IMTOs, the CBN sets an allowable limit of -2.5% to +2.5% of the previous day’s Investors’ and Exporters’ window average rate as the anchor rate for the naira payout option.”
“Thus, banks and International Money Transfer Operators must adhere to these specified limits. Please take note and ensure strict compliance.”
