…says market unfavourable for devaluation
The Central Bank of Nigeria (CBN) has maintained that market fundamentals do not support Naira devaluation this time around. The CBN made this known through its Director, Corporate Communications, Mr. Isaac Okorafor in Abuja.
Okorafor expressed dismay at speculative activities at the foreign exchange market from impressions that the CBN would devalue the naira, thereby triggering panic in the Foreign Exchange Market.
He said these rumours were false, unwarranted and calculated to serve dubious and selfish ends.
“We, therefore, wish to state that we have begun a robust and coordinated investigation in collaboration with the Nigerian Financial Intelligence Unit (NFIU) and related agencies to uncover the unscrupulous persons and Foreign Exchange dealers who are creating this panic, and the full weight of our rules and regulations will be meted out to them.
“This including, but not limited to, being charged for economic sabotage. For nearly four years, the CBN has successfully maintained relative stability in all segments of the foreign exchange market, which has enabled investors, households and other economic agents to plan and to conduct their genuine foreign exchange transactions with relative ease.
“The introduction of several foreign exchange management measures side-by-side with complementary interventions in food production and manufacturing has drastically reduced food importation, which hitherto constituted a large chunk of the pressure on the foreign exchange market.
“Although the outbreak of the Coronavirus led to the global economic slowdown, fall in the price of crude oil, and less inflow of dollars into Nigeria, 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 foreign exchange orders.
“The size of Nigeria’s foreign exchange reserves remains robust and comfortable, given the current realities of Nigeria’s genuine and legitimate Foreign Exchange demand. As such, the CBN remains able and willing to meet all genuine demand for foreign exchange for legitimate transactions,” he explained.
The director noted that the CBN was also 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.
He said in light of current circumstances and macroeconomic fundamentals, the CBN has not devalued the Naira.
According to him, the CBN will invoke the full weight of applicable sanctions on any persons and authorised involved in such disruptive and speculative market behaviour.
Meanwhile, an economist, Prof. Sheriffdeen Tella, has urged the Federal Government to institute a long-term national plan that will strengthen economic diversification to enhance revenue generation.
Tella, Professor of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun, said this while reacting to the crash in crude oil price.
President Muhammadu Buhari recently set up a committee to review the 2020 budget crude oil benchmark.
This is coming after the president held an emergency meeting over the falling crude oil price.
He stated that the current global and economic realities had called for an urgent need for long-term national plan that would highlight path to economic diversification.
“It is high time we institute long term national plan that would highlight path to economic diversification, path to national saving in terms of the Sovereign Wealth Fund and path to national consumption such that we consume what we produce.
“The crash of the oil price and the resulting panic once again tells us how fragile the Nigerian economy is without diversification of production and sources of income.
“Unfortunately, both sovereign wealth fund and excess crude account that are supposed to provide buffer for the revenue shortfall are down. So, what is to be done is to re-priotise the projects in the budget for execution.
“If the present global economic problem is short lived or temporary, suspended projects can be resuscitated,’’ Tella said.
Commenting on the committee set up by the president to review the 2020 budget, Tella said the committee was unnecessary.
He noted that the President’s economic team was supposed to be given the task of the present committee.
“The outcome of their output could be subjected to discussion at Executive committee for eventual adoption,’’ he added.