The Governor of the Central Bank of Nigeria, Mr Godwin Emefiele has stated that there was no intention by the federal government to further devalue the naira.
Addressing State House correspondents, Mr Emefiele said that the apex bank was rather concentrating on how to improve and deepen the foreign exchange market by improving supply of foreign exchange into the market.
He added that the CBN is also concentrating on how to reduce the import of items that could be produced locally.
Vice President Yemi Osinbajo has also said that devaluation of the naira is not an appropriate option in the current economic realities in the country as it is not healthy for the Nigerian economy.
The Vice President, while receiving the Italian Ambassador in Nigeria, Mr. Fulvio Rustico and the Canadian High Commissioner in Nigeria Mr Perry John Calderwood in his office on Thursday shared similar views as the CBN Governor.
In his reckoning, FDI is more forward looking than portfolio investments which is being affected by the decision to manage the foreign exchange resources of the country.
“I am not sure devaluation is the issue, but how to ensure foreign direct investment which is more useful,” the Vice President noted, adding that he expects a bit more stability and direction in the next few months.
He disclosed that the Federal Government would work with the Central Bank of Nigeria to ensure that legitimate businesses are not badly impacted by the current foreign exchange restrictions, especially those who have previous contracts and loan commitments.
The Nigerian Vice President, Professor Yemi Osinbajo, has given reasons for the government’s disapproval of further devaluation of the nation’s currency, saying it is not an appropriate option in the current economic realities and offers no solutions as far as the Buhari administration is concerned.
President Muhammadu Buhari had earlier expressed his views that a further devaluation of the Nigerian Naira was not healthy for the economy.
At a meeting on Thursday with the Italian Ambassador in Nigeria, Mr Fulvio Rustico and the Canadian High Commissioner in Nigeria, Mr Perry John Calderwood, in his office in Abuja, Vice President Osinbajo emphasised President Buhari’s views and said he would also not support further devaluation of the Naira.
He said: “I don’t agree on devaluation of the Naira and it is not that I am doctrinaire about it. In the first place, it is not a solution. We are not exporting significantly. And the way things are, devaluation will not help the local economy.”
“What we need to do is to start spending more on the economy and then things will ease up a bit”.
He observed that the issues around the economy were no exact sciences, stressing that “what is important is to be reasonably flexible in dealing with them”.
To Bring Some Stability
In a statement issued by the Senior Special Assistant-Media & Publicity, Laolu Akande, the Vice President outlined the Federal Government’s plans to set-up a $25 billion Infrastructural Fund which would be sourced from local and international sources, through Nigeria’s Sovereign Wealth Fund and the pension fund among others.
He disclosed that already, other Sovereign Wealth Funds had indicated interest in the fund which would be used to address the nation’s decaying road, rail and power infrastructures.
“This is our approach to speeding up the country’s infrastructural development.
“The current foreign exchange restriction is a temporary measure to ensure that “we don’t deplete our foreign exchange substantially at a time when the prices of oil in the international market is dropping,” Professor Osinbajo restated.
According to him, the restriction was put in place to bring some stability to the oil-rich nation’s foreign reserves without which Foreign Direct Investment, (FDI) might be affected.
“The FDI is more forward looking than portfolio investments which are being affected by the decision to manage the foreign exchange resources of the country at this time.
“I am not sure devaluation is the issue, but how to ensure foreign direct investment which is more useful,” the Vice President noted, emphasising that he expects a bit more stability and direction in the next few months.
He further said that the Federal Government would work with the Central Bank of Nigeria to ensure that legitimate businesses were not badly impacted by the current foreign exchange restrictions, especially those who had previous contracts and loan commitments.
Professor Osinbajo expressed the appreciation of the Federal Government to the Italian and Canadian envoys on behalf of President Buhari and also looked forward to closer and deeper ties between Nigeria and the two countries.
Nigeria’s Naira shed 0.55 per cent against the dollar on Monday after some customers who failed to meet the cut-off time to submit dollar demand to the Central Bank of Nigeria (CBN) sought the greenback from other sources, dealers said.
On Monday, the unit closed at 200.60 Naira to the dollar, weaker than Friday’s close of 199.50 Naira.
The Naira traded at 215 to the dollar at the parallel market, operated by Bureau de Change agents.
The Nigerian currency crashed through a psychologically important level of 200 Naira to the dollar this month in a rout triggered by weak oil prices and escalating tension over the postponement of a presidential election, prompting the CBN to scrap its bi-weekly forex auctions.
Dealers said some customers submitted their orders to the CBN after a 12:00 GMT cut-off time and were not allotted dollars, leaving them to source hard currency from lenders.
Addax sold $6 million on Monday while Royal Dutch Shell sold an undisclosed amount on the interbank, dealers said. Lenders also resold to their customers at a spread.
The CBN scrapped its bi-weekly currency auctions on Wednesday and a market body said it would sell dollars only at 198 Naira, a move that amounts to a de facto devaluation of the currency of Africa’s biggest economy.
The Nigerian naira firmed against the dollar on the interbank market on Monday, gaining 0.48 percent, after state-owned energy company NNPC sold an undisclosed amount of U.S. currency to lenders.
The naira closed at 163.85 to the dollar, compared to 164.65 at Friday’s close.
The naira has been slipping since last month, weakened by falling global oil prices and low inflows of hard currency into Nigeria’s debt and equity markets.
Traders said the NNPC’s dollar sales brought a temporary relief to the market, but the naira is seen depreciating again, to the 164 to the dollar level, before Friday on persistent demand from mainly offshore investors selling down their bonds and equity holdings.
“As long as the oil price continues to slip, the naira will remain under pressure from those who will want to hedge against further loss,” one dealer said.
Nigeria is Africa’s biggest oil producer. Oil prices have fallen by more than 20 percent since June, touching a four-year low on Monday below $88 a barrel, and oil analysts forecast further falls.
The Nigerian naira firmed on the interbank market on Monday as dollar flows from two energy companies and banks increased liquidity and supported the local currency.
The naira closed at 161.10 to the dollar, firmer than its 161.25 close on Friday.
Traders said a unit of Addax Petroleum sold $10 million and Agip sold about $3 million to lenders. Some banks that bought dollars from state-owned energy company NNPC last week sold a portion of their holdings in the market on Monday.
“The market is comfortable with the level of dollar liquidity, that was the reason the naira is trading at this level today,” one dealer said.
The naira rose to 160.10 to the dollar on the interbank market last Monday after NNPC sold around $400 million, but fell in the week as demand squeezed out part of the supplies. But traders expected the naira to strengthen this week.
“We see the naira appreciating further in the near term because we are gradually entering the month-end cycle and expect more dollar inflows from oil companies and offshore investors buying local debt,” another dealer said.
On the bi-weekly auction, the central bank sold $300 million at 155.89 to the dollar, compared with $430 million sold at 155.87 to the dollar last Wednesday.