Following the recent naira depreciation in the parallel market, the Central Bank of Nigeria has begun implementing foreign exchange intervention measures targeted at limiting currency speculators in the foreign exchange markets.
Folashodun Shonubi, Acting Governor of the Central Bank of Nigeria, made the remark to State House journalists on Monday at the Presidential Villa after updating President Bola Tinubu on what the bank was doing to stop the naira’s decline.
He said Tinubu expressed his concern over the effects of the recent developments in the foreign exchange market, particularly on average citizens.
According to Shonubi, the volatility of the naira in the parallel market is not solely driven by economic factors, but also speculative demand.
The apex bank governor said while he would not disclose specific details of the proposed intervention measures, he warned speculators that the proposed measures could potentially lead to significant losses for them.
He said the primary purpose of his presence at the Presidential Villa was to reassure the President that the CBN was taking decisive action to address the concerns raised.
He expressed confidence that the measures being implemented would yield positive outcomes within a few days.
According to him, the CBN’s ultimate goal is to create an efficient and reasonable operating environment that minimises the negative impacts on the average Nigerian’s life.
He said, “Mr President is very concerned about some of the goings on in the foreign exchange market. One of the things we discussed is 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’s concerned about its impact on the average person, since, unfortunately a lot of activities that we do, which are purely local, are still referenced to exchange rates in the parallel market.
“We’ve discussed and I’ve shared with him what we’re doing to improve supply. If you look at the official market, you’ll find that that market has been fairly stable and the spreads of the difference have not fluctuated as much.”
He added, “We do not believe that the changes going on in the parallel market are driven by pure economic demand and supply, but are touched by speculative demand from people.
“Some of the plans and strategies, which I’m not at liberty to share with you, means sooner rather than later, the speculators should be careful because we believe the things we’re doing, when they come to fruition, may result in significant losses to them.
“But my presence here is more about the concerns the President has and his needs to know that we are doing something about it, assurances of which I have given him totally.
“So I hope this helps. We are looking at it and we’re doing things which will significantly impact the market in a few days time and we will all see it. The intention is to ensure the environment operates at a level that’s more efficient, but also that is also very reasonable and does not have a negative impact to the best that we can on the lives of the average person.”
