The Acting Governor of the Central Bank of Nigeria (CBN), Folashodun Shonubi, has announced that there are new measures approved by President Bola Tinubu to stabilize the fluctuating forex market.
Shonubi, who attributed the current volatility in the FX market to speculation, told journalists at the Presidential Villa, Abuja, that the move was necessitated by the president’s concern about the impact of the naira’s depreciation on Nigerians.
He mentioned that the President voiced concern about the effects on the average individual, particularly because all local economic transactions continue to be influenced by exchange rates in the parallel market.
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“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 stabilize 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 said.
He said foreign exchange market speculators should be mindful of their actions, warning that they would inevitably face substantial losses once the government initiates its proposed strategies.
The head of the central bank also said that the government intends to take stern measures against those engaged in speculative activities within the foreign exchange market.
“We do not believe that the changes going on in the parallel market are driven by pure economic demand and supply, but are topped 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,” he said.
Shonubi said he met with the president due to his concern about the naira’s performance in the FX market and to assure him that the CBN is doing something about it.
“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,” he said.
“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,” Shonubi added.
The CBN governor had earlier attributed the naira’s poor performance to some illegal activities in the financial institutions. He said that major FX inflow from diaspora remittances is being diverted to the parallel market by bankers, thereby sabotaging the liquidity of the Investor & Exporter window.