CBN to take new measures to ease pressure on naira; stabilize against dollar

The Central Bank of Nigeria (CBN) is set to take new measures to stabilise the naira against the dollar.

The acting governor of the CBN, Folashodun Shonubi disclosed this to journalists on Monday, August 14, 2023, after meeting with President Bola Tinubu in Abuja whom he said is worried about the fall of the naira against the dollar.

Shonubi said: “The president is very concerned about some of the goings-on in the foreign exchange market. One of the things we discussed was what could be done to stabilise and what could be done to improve the liquidity in the market and also the goings-on in the various other markets including the parallel market.

“He is concerned about the impact on the average person. The things that you do which are purely local are still referenced to exchange rate in the parallel market. We’ve discussed and I have shared with him what we are doing to improve supply. If you look at the official market, you will find out that the market has been fairly stable and the spread of the difference has not fluctuated as much.

The CBN boss said as part of effort to address the free fall of the naira, government will go hard on those involved in dishonest undertaking in the foreign exchange market, including the parallel market.

Shonubi explained that the changes in parallel market are not dictated by demands but by speculative attitude.

The CBN boss said he has discussed what could be done to stabilize the naira with the president and once the government activates its strategies, the speculators would incur huge losses.

The pressure on the naira in the parallel segment of the foreign exchange market relaxed on Monday as CBN announced plans to boost dollar supply in coming weeks.

Some dealers said that the availability of dollars in banks, due to increased supply by the CBN has helped more lenders accommodate genuine FX demands that would have found their way into the unofficial/parallel market.

“It has not increased so much between last Friday and this morning. I feel the banks are getting more dollars from the CBN to meet genuine demands. Those demands that found their way into the parallel market have reduced because more banks have dollars to meet customers demands. It is a willing buyer and willing seller market. Dollar is still cheaper in the I&E window,” an FX dealer said.

The dollar has remained flat at the parallel market since Friday, closing at N945/$ on Monday, according to data by AbokiFX, an online platform that tracks the exchange rate on the parallel market.

Last week, the naira appreciated by 0.33 percent week-on-week at the Investors & Exporters (I&E) window to close at N740.6/$, from its previous close of N743.1/$. At the parallel market, it depreciated week-on-week as the market saw offer quotes in the range of N885/$- N940/$. Activities in the I&E window had weakened as average FX turnover fell last week by 14.2 percent to settle at $78.1 million. Nigeria’s external reserves fell by 0.14 percent to settle at $33.1 billion.