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In response to the recent depreciation of the naira in the parallel market, the Central Bank of Nigeria (CBN) has introduced foreign exchange intervention measures aimed at curbing currency speculators in the foreign exchange markets.
Folashodun Shonubi, the Acting Governor of the CBN, revealed this development after briefing President Bola Tinubu about the bank’s efforts to stabilize the naira. He indicated that the naira’s volatility in the parallel market is not solely due to economic factors but also speculative demand.
While specific details of the intervention measures were not disclosed, Shonubi warned speculators that these measures could lead to significant losses for them.
Shonubi stressed that the CBN’s goal is to create an efficient operating environment that minimizes negative impacts on the average Nigerian’s life.
The CBN has issued a circular to authorized dealers, international money transfer operators, and the public, placing limits on the exchange rate for naira payouts of diaspora remittances.
The circular directs that the naira payment option for proceeds of diaspora remittances should be within a limit of -2.5% to +2.5% of the previous day’s average rate on the Investors’ and Exporters’ window.
These measures come as the naira has faced significant pressure in both the parallel and official markets. The recent financial statements of the CBN reveal that the effective foreign exchange reserves are lower than previously disclosed, raising concerns about the central bank’s capacity to defend the naira.
Experts suggest that further interventions and incentives for foreign portfolio inflows might be necessary to alleviate the pressure on the naira and stabilize the forex market.
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