Experts give reasons why CBN interventions are not saving naira
After several months of routine injection of forex by the Central Bank of Nigeria (CBN) with negligible results in salvaging naira, financial experts have opened up, saying the reasons behind the steady depreciation of the nation’s currency are beyond the powers of what the apex bank is doing.
Giving a detailed analysis in Lagos on Wednesday, erudite professors of economics, Prof Chukwuma Soludo, former CBN governor and Prof Pat Utomi averred that much is still needed to be done to drive out the economy from recession, arguing that routine interventions in forex alone cannot give the needed force to change things.
Also, in separate interviews in Lagos, other pundits averred that a single market rate, among others, was required to reverse the depreciating trend of the naira and that ,may not come form only monetary policies of the apex bank.
President of the Association of Bureaux de Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, said an apparent devaluation of the interbank market rate was having a negative impact on the Naira and that investors were uncomfortable with the prevailing multiple rates in the market, adding that multiplicity of rates could engender currency speculation and round tripping.
In his further submission, he said the demand for foreign exchange by pilgrims was putting the naira in difficulty.
Also, another financial expert and a BDC operator, Mr. Harrison Owoh, said the demands for foreign exchange by pilgrims were far outstripping the supply, stressing that the $2000 auctioned to pilgrims on subsidized rate appeared not to meet their needs; hence they had to put pressures on the parallel market for more.
He said “The naira relapsed into depreciation after several weeks of appreciation fueled by the aggressive interventions of the CBN at the foreign exchange market”.
It would be recalled that naira had exchanged between N360 and N365 to the dollar for about four months before it started depreciating.
Currently, naira is exchanging between N367 and N370 to a dollar at the parallel market.