The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has said that the bank will not devalue the Naira again despite calls for the devaluation of the currency in times of economic turmoil.
The International Monetary Fund (IMF) recently called for Nigeria to further devalue the Naira, as the already panicked economy is yet to record any improvements in its political and economic outlook. Similarly, past CBN governor, Sanusi Lamido had also called for the depreciation of the Naira.
The Governor of the apex bank explained to journalists that the last devaluation took place in February and is set to remain as such for the time being. “The truth is that we had adjusted the currency by depreciating it from N155 to N197 in February this year. There is no intention to depreciate or adjust the currency any longer,” he said.
Here are some other key highlights from Emefiele’s recent reply on the Devaluation of the Naira:
Vice President Yemi Osinbanjo declared a similar obligation on Thursday when he stated that the government does not intend to change its position concerning the devaluation of the currency.“The President has been very clear on this; the Vice President has been very clear on this and let me further reiterate our position at the CBN, that we are not considering any further depreciation of the currency,” said Mr Emefiele.
According to Mr Emefiele, the bank intends to focus on deepening the foreign exchange market, “[…] by improving supply of foreign exchange into the market. And to do so, we are trying to encourage people to export and earn your export proceeds and use your export proceeds to import whatever you need to import.” He also explained that there are plans to reduce the import of items that can be locally produced today.
Therefore the apex bank is set to launch a campaign called PAVE—“Produce locally, Add Value and Export your product and earn your foreign exchange for your imports.” He explained that the campaign is the only means of boosting the efforts of the CBN in intervening and providing foreign exchange in the market to meet the high demand for such imports.
The Central Bank will stop at nothing to save the Naira
While the CBN Governor continues to work harder to save the Naira, nothing good seems to be coming from these efforts. Key players in the banking sector, comprising of some Chief Executive Officers and certain committee members have expressed their discontent with the ways in which the currency is presently handled. Analysts have deliberated on the logical basis behind the current value of the Naira amidst the incessant fall in oil prices and the CBN’s currency controls. Segun Agbaje, Managing Director of GTB, a top tier Nigerian lender, said in August that the exchange rate is unsustainable, and will need to be devalued by 10 percent for the Naira to settle.
The CBN governor, Godwin Emefiele recently defended his currency controls while remaining resolute that the Naira was “appropriately priced.” He made this assertion at the Financial Times Africa Summit in October. However in the same summit, the head of Ecobank pointed to the fact that only about 20 percent of the economy was supported by the fixed foreign exchange rate. Thereby presenting reasons why the governor’s honorable intentions may come across as an attempt at shielding bigger problems.
There has been continuous pressure on the currency as the fall in oil prices and the imbalance between increasing demand for foreign currency and the foreign exchange available, continue to intensify. Over the past year the Naira lost about 15 % against the dollar with an official devaluation in November last year. It was devalued from N150-N160 to the U.S. dollar to N160-N176 as it battled to preserve macroeconomic stability, while raising serious concerns.
The Naira has lost more than 25 percent of its value over the last year.