No cause for alarm, CBN says of falling naira

Despite a three-day straight slide in the exchange rate of the Naira against the US Dollar, the Central Bank of Nigeria (CBN) has said that there is no need for panic, and that it could be just a temporal reaction to policy change.

The apex bank also stated that it would not bow to pressures to further devalue the naira. This is even as dealers in the parallel markets expressed fears that at the on-going speed of slide the exchange rate might hit the N250/USD1.00 low by next week.

But CBN’s Director of Corporate Communications, Mr Ibrahim Muazu, while defending the recent foreign exchange measures taken by the apex bank to shore up the dwindling foreign reserves, said the apex bank would not be pressured into further devaluation of the local currency which he said was the intent of some sections of the foreign communities.

He said the parallel market cannot trigger any economic crisis since all major foreign exchange demands for eligible imports go through the official exchange market which has not only remained stable but has been fully supplied by the apex bank so far.

Bureau de Change (BDC) operators said huge demand for foreign exchange began to inundate them as well as the black market as a result of the CBN’s shut off of 41 items from the official market three weeks ago.

Read also: CBN defends naira with $5.3bn

But Muazu denied this assertion, stating that CBN’s findings was that the supply/demand gap being experienced in the parallel market was as a result of supply shortages in that segment following the plugging of loopholes from the official markets that had hitherto leaked into parallel market through round tripping.

He also said other economic crimes such as money laundering were major drivers of what is happening in the parallel market today.

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