CBN: Why the naira is getting stronger

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The Central Bank of Nigeria (CBN) said the recent appreciation of the
Naira against other currencies was the result of its market monitoring
and intervention.

The acting Director, Corporate Communications of the CBN, Mr Isaac
Okorafor on Thursday in Sokoto refuted the claim that the allegations
by Mr Babatunde Gbadamosi on the illegal sales of foreign currencies
at ridiculous rates was responsible for the change in forex policy.

Babatunde Gbadamosi, a Lagos businessman and former governorship
candidate, made allegations of racketeering against the CBN and
favouritism in allocation of foreign exchange to cronies of the
present administration

He accused the CBN of selling dollars to some people for as low as N3
to a dollar.

Later, the CBN released a statement, clarifying that the transactions
in question were third party transactions like Japanese Yen to the
South African Rand, or Euros to U.S Dollars.

The CBN later went further to direct banks to file returns on the sale
of foreign currencies in dollars to avoid ambiguities and
misinterpretations in future.

Okorafor said also that the appreciation of the Naira was in no way
connected to the allegations of Gbadamosi.

“I want to state categorically that there is no relationship
whatsoever between the allegations by the so called person that dollar
was being sold at 61 kobo and the current appreciation of the Naira.

“What led to the appreciation of the Naira includes the following:

“The CBN has done its intelligence work on the market and we came to
the realisation that much of what was driving the demand on the BDCs
and parallel market was speculation.

“We reasoned that since there is a lot of pressure on the two segments
from people seeking to buy foreign currencies for BTA, tuition and
medical, that if we successfully address that, the pressure will come
down.

“Also, before now, the level of our reserves was not enough to make us
comfortable to really do the kind of intervention that is required.

“We decided to do so now because we are a bit more comfortable with
our level of reserve,” he said.

Okorafor said that since the new forex policy, the CBN had intervened
with about 591 million dollars in the market which had led to Naira
gaining strength.

“Let me also state as proof that when we placed 500 million dollars in
the market only 370 million dollars was taken.

“That tells you that the real demand is $370 million. When we placed
230 million in the market, only $221 million was taken.

“Anybody who has run foul of the law and the security agencies have
caught up with him, should go and face his or her case and stop
causing confusion amongst participants in the market,” he said.

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