The Central bank of Nigeria (CBN) believes however all will be well soon despite the depreciation.
Recently CBN raised Nigeria’s interest rate and it will be hoping that will help stabilize Naira.
The Central Bank of Nigeria has assured Nigerians that the current Naira depreciation will soon be over.
Michael Adebayo Adebiyi, CBN’s director, research department, at the Chartered Institute of Bankers of Nigeria (CIBN) gave the assurance at the roundtable session on the mid-year review of the economic outlook for 2022.
According to him, Naira, Nigeria’s legal tender, is expected to stabilize in the short to medium term and subsequently, in the long run.
Bellnews Online reports that to restore relative stability in the foreign exchange market, in the short to medium term, the CBN is expected to sustain the 100-for-100 Policy for Production and Productivity (PPP) and the Naira-4-dollar scheme and enhance the FX position in the I&E window by encouraging the participation of top 100 non-oil exporters in the RT200 FX programme.
Adebiyi strong believes that the policy would help stabilise the exchange rate and boost reserves accretion in the short-to-medium term.
He said:
“In the mid-to-long term, Naira is expected to stabilise as higher interest rates mean more foreign portfolio inflow and a stronger naira. “In the near-term, we expect the rise in interest rates to improve the investment climate to remain competitive”
He added that financial markets will remain upbeat as investors continue shopping for the highest interest rate on their short-term investments.
“The Central Bank’s intervention in the foreign exchange market, subsidies on premium motor spirit (PMS), rising import bills, and increased external debt-servicing would remain impediments to reserves accretion.”
“The future looks optimistic given the various efforts of the CBN at repositioning the financial and real sectors of the economy for sustainable development. However, more still needs to be done, particularly in the agricultural sector and ICT.”
Adebiyi called on the fiscal authorities to support the intervention efforts of the CBN, by providing competitive tax incentives for the importation of large-scale and high-impact technology and innovation to enhance agricultural yield and efficiency in the entire value chain.
Naira falls to N710
CBN assurance is coming as Nigerian currency on Wednesday dropped to 710 to a dollar at the peer to peer foreign exchange market, The Sun reports.
Wednesday rate is the lowest level Naira has exchanged to the dollar in the history of Nigeria.
Banks release names of customers using fake visa to buy cheap dollar for resale
Meanwhile, in compliance with CBN directives, ten Nigerian banks have revealed the names of customers buying cheap dollars to likely resell at the black market
In a circular in July 2021, CBN had directed banks to publicize the identities of persons who engage in such behavior and to restrict them from obtaining currency in the future
The huge gap between the black market and the official rate has further created a market for some unscrupulous Nigerians to profit from.