Nigeria’s currency, the Naira, has hit an all-time low of 42 years against the United States Dollar, just six months into the regime of President Muhammadu Buhari.
On Friday, the Naira traded N260 against one Greenback at the parallel market.
The free fall of the Naira is coming on the heels of strict forex interventions by the Central Bank of Nigeria (CBN) which placed 39 import products on forex ban as well as rejection of dollar deposits by banks despite calls to the contrary by a former Governor of the Central Bank, Emir Sanusi Lamido Sanusi.
Sanusi had warned that the artificial policy of shoring up the Naira was putting Nigeria, Africa’s biggest economy, in danger of a long term slump unless the government confronts slowing growth.
At a speech he delivered in Lagos broadcast on CNBC Africa, he was quoted as saying, “Let’s stop being in denial, we cannot artificially hold up the currency. President Muhammadu Buhari needs help on the economy.”
But Emefiele at the World Bank/IMF Annual Meeting in Lima, Peru, stated that the apex bank’s decision on forex was to save the economy from sliding into recession.
He said; “We need to prioritise to make sure that foreign exchange is made available only to those who are importing essential raw materials and products we know cannot be produced within the country. That is the only way we can conserve our foreign exchange and reduce the demand for foreign exchange for the importation of some of these products we are saying can be produced in the country. And we will continue to plead and crave everybody’s indulgence, to give us the support, as we are convinced that these items can be produced here in the country.
“I have read and heard from people saying the central bank is preventing people from getting foreign exchange. Let me also say here that part of central bank’s role is to intervene in the foreign exchange market, and we have tried as much as possible to broaden the market so that those who earn foreign currency through export proceeds can also make their funds available to the market for everybody to share from.”
In its effort to shore up the value of the Naira, the CBN had introduced the policy of selling over $80m to Bureau De Change (BDC) operators, to keep the unofficial rate close to that of the parallel market and the policy is however undergoing review, as the CBN circular reported by Reuters has set out new guidelines for the 2016 BDC transaction of dollars.
The circular, which will come into effect in January, “orders retail money exchanges to deposit a mandatory cautionary deposit of N35 million in an account with the central bank, in addition to a minimum capital requirement of N35 million”.
In December 1980, exactly 35 years ago, the naira was one dollar and eight cent.
The prevailing scenario has seen lots of businesses groaning as they cannot access forex easily, while fear has spread of most of them closing shops.