Naira drops further to new low at official market as CBN defends policies

Many analysts’ predictions that the value of Naira could drop further in the second quarter is becoming a reality.

On Thursday, at the Investors and Exporters forex window, the naira once again depreciated to the US dollar by 0.28 percent to close at N419.50 as against N418.33 on Wednesday.

FMDQ data shows that most currency dealers maintained bids between N410.00 and N444.00 per dollar.

The poor performance of Nigerian currency occured as Godwin Emefiele, governor of CBN at the ongoing 2022 Spring Meetings of the International Monetary Fund/World Bank Group defended Nigeria’s forex policies.

According to him, Nigeria is operating a float exchange rate regime.

‘What that means is that we cannot go on with what is proposed as a free float of the currency,” he said, adding that doing so would make the exchange rate spiral “as long as demand surpasses supply.”

His response is coming on the heels of World Bank president David Malpass’ criticisms of Nigeria’s exchange rate policies which include keeping the Naira too high than its real value.

Emefile added that CBN cannot be accused of not adjusting the country’s currency.

He argued that official exchange rate had been adjusted from N155 per dollar in 2015 to N420/$.

Read also: Naira drops to lowest level in 2022 against US dollar

‘“We have been at this since 1986 and that is why we are saying that whereas we are also doing something to adjust the currency; for instance, between 2015 and now, you will observe that we have adjusted the currency from N155 to about N410, N420 that it is today,” he said.

Emefiele said: “We cannot be accused of not adjusting the currency. We are trying to adopt a very gradual approach towards adjusting the price to the level that it is today. But at the same time we have to be given the chance to also look at while you are adjusting the price, you must also do something about demand and supply.

“That is the reason we are saying we need to do something on demand to make sure that those things we can produce in the country, we restrict access to FX for them so that we encourage people to produce locally. When that happens, demand for FX will reduce and when it reduces, ultimately the price will not rise beyond Nigerians.”

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