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Why CBN Will Not Devalue Naira Now-Emefiele

As pressure mounts on the Central Bank of Nigeria to unify the Naira at the different foreign exchange windows, the apex bank has said that it will not devalue the currency anytime soon following its impact on prices.

The regulator said this in an interview monitored by THE WHISTLER during the 277th Monetary Policy Committee Meeting.

Nigeria’s largest lender has been faced with the dilemma of putting the right foreign exchange policy in place to ensure stability in the foreign exchange market.

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But with inflation at 15.75 per cent, the apex bank said further devaluation of the naira may skyrocket prices amidst low consumer income.

The CBN Governor, Mr Godwin Emefiele, said that the apex bank cannot continue to devalue the Naira each time the currency is under pressure in the foreign exchange market.

He said, “We want to see how we can diversify our sources for fervent revenue into the economy, thereby boosting supply. That is what we call supply management.

“We have already adjusted our currency and we think that we cannot continue a spiral adjustment to the exchange rate because it has very serious dire and devastating consequences on prices in our economy.

“So, that is why at this time, it will be a last option for us. We want to explore more options where we can achieve more effective foreign exchange revenue generation.”

The apex bank had last year devalued the Naira twice at the official window due to the Covid-19 shock which cut foreign exchange revenues from crude oil sales.

The Naira was first devalued on March 20th to N360 from N307 and further adjusted to N380 per dollar in August last year.

In November 2020, the apex bank reversed its Diaspora remittance policy to allow beneficiaries of Diaspora Remittances through International Money Transfer Operators receive such inflows in foreign currency (US Dollars) through the designated bank of their choice.

Such recipients of remittances may have the option of receiving these funds in foreign currency cash or into their ordinary domiciliary account, a move targeted at encouraging remittances through the appropriate channel.

The International Monetary Fund and the World Bank had last year pressured the apex bank to harmonise the different exchange rate and adopt a floating foreign exchange rate.

Nigeria has operated three exchange rates. They are the CBN official rate, the Investor’s and Exporter’s window and the parallel market rate.

CBNCENTRAL BANK OF NIGERIADiaspora RemittancesForeign Exchange MarketGODWIN EMEFIELEinternational monetary fundInternational Money Transfer OperatorsMonetary Policy Committeempcworld bank
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