Friday, March 3

How We Crashed The Price Of Dollar” – CBN Offers Insight

 The Central Bank of Nigeria, CBN, has said the nation’s currency, Naira, has being gaining against major international currencies in the foreign exchange market in recent weeks due to its decision to deepen its intervention in the market.

Mr. Isaac Okoroafor, CBN’s spokesman told journalists at a press conference in Sokoto, yesterday, that the bank provisions had outstripped demand on two consecutive interventions in recent times. According to him, on the first occasion, the CBN placed $500 million but that only N$370 million was taken. 

He added that on a second occasion, the apex bank placed $230 million and that only $221 million was taken, to demonstrate that the pressure was easing in the market. He refuted claims in social media reports that the current appreciation of the Naira was because a self-acclaimed whistleblower exposed an alleged corruption in the forex market where it was alleged that some people received dollars at a rate as low as 61 kobo/$1.

Mr. Okoroafor said: “I want to state and make it categorical that there is no relationship whatsoever, between the allegation by the so-called person that dollar was being sold at 61 kobo and the current appreciation of the Naira.

“I want to state that what led to the appreciation of the Naira include the following: *The CBN has done its intelligence work in the foreign exchange market and we came to the realization that much of what was driving the demand in the BDCs and the parallel market was a bubble, speculation.

 “And we reasoned that since there was pressure on those two segments from people seeking foreign exchange for PTA (Personal Travel Allowance), medicals and tuition, that if we successfully address those needs, that the pressure will come down. “The other issue was that the level of our reserve before now. We didn’t feel comfortable enough to do the kind of intervention that we required. “Now we have decided to undertake the intervention at this time because we are a bit more comfortable with the current level of our reserve.”

And because of that we intervened in the market and the market reacted positively and the Naira began gaining strength. “Let me also state and prove that when we placed $500m in the market , only $370 million was taken. And that tells you that it was all bubble. The real demand was $370 million. When we placed $230 million in the market, only $221 was taken up. It is as simple as that.

 “Anyone who has gone foul of the law and the law has caught up with him should go and face his or her case and stop causing confusion among participants in the market. I need to make this clear.”

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