Denying Bloomberg Report, CBN Not Floating the Naira

• Says no change in exchange rate structure

Obinna Chima

The Central Bank of Nigeria (CBN) yesterday refuted reports that it had floated the naira, Nigeria’s currency.

The Director, Corporate Communications, CBN, Mr. Isaac Okoroafor, stated this in a text message to THISDAY, in reaction to a Bloomberg report that the bank had signaled it would float the naira and allow it to weaken past its official rate as it gradually unwinds its regime of multiple exchange rates.

But the CBN spokesman who described the report as false, said the naira exchange rate remained stable.

Okoroafor reaffirmed the bank’s commitment towards ensuring stability in foreign exchange market.

“There has been no change in Nigeria’s exchange rate structure. The CBN has not floated the naira. The exchange rate remains stable. Speculations and reports to the contrary are false,” Okoroafor said in response to the Bloomberg report.

CBN Governor, Mr. Godwin Emefiele, at a forum with private sector operators in Lagos last weekend, restated the bank’s commitment to continue to defend the naira, saying that the CBN Act demands that the bank “defends” the naira using the foreign exchange reserves.

“In effect, the CBN would be disobeying the law establishing it, if it sits idly by and allow the naira to be determined wholly by the so-called market forces.

“Second, those who call for floating of the currency betray their willful ignorance of the effects of significant depreciation, however short-lived, on inflation.

“Several empirical analyses have shown that the pass-through of changes in the exchange rate on consumer prices is almost one-to-one. This implies that for every percentage point depreciation in the naira, there is almost the same rise in inflation.”

He also said policies of the apex bank in the past five years had been focused on protecting the purchasing power of the poor and vulnerable persons in the country.

According to Emefiele, the apex bank is comfortable staying on the side of the weak, vulnerable, and poor masses and protecting their purchasing power.

Emefiele had also pointed out that the task of building a stronger economy was far from complete; with the pace of Gross Domestic Product (GDP) growth still very fragile and badly lagging behind population growth rate of 2.7 per cent.

The interbank segment of the forex market on Tuesday received a boost of $210 million from the CBN.

Figures obtained from the CBN indicated that authorised dealers in the wholesale segment of the market were offered $100 million, while the small and medium scale enterprises (SMEs) segment received $55 million.

The sum of $55 million was allocated to customers requiring foreign exchange for invisibles such as tuition fees, medical payments and Basic Travel Allowance (BTA), among others.

At its previous intervention, the bank had injected $294.7million and CNY31.4million into the Retail Secondary Market Intervention Sales (SMIS) segment. The naira exchanged at an average of N360/$1 in the BDC segment of the market.