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HomeTop NewsCBN plans to take action to curb naira's slide, warns speculators

CBN plans to take action to curb naira’s slide, warns speculators

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The Central Bank of Nigeria (CBN) has revealed its plans to implement new measures aimed at stabilizing the naira against the dollar as part of efforts to address the persistent depreciation of the local currency.

The acting governor of the CBN, Folasodun Shonubi disclosed this during a press briefing following a meeting with President Bola Tinubu in Abuja on Monday.

The currency, however, closed flat on the parallel market on Monday with the Bureau de Change operator selling the dollar at N945, the same rate it was sold on Friday. Also on the I&E forex window, the currency closed down at N744.41 compared with N740.60 to the dollar.

Expressing concerns over the consistent decline of the naira against the dollar, Shonubi affirmed that the CBN is committed to taking decisive actions to curb the situation and enhance market liquidity.

He highlighted that the fluctuations observed in the parallel market are not solely attributed to economic factors but also stem from speculative demand.

While Sonubi refrained from disclosing specific details about the upcoming measures, he cautioned speculators that the CBN’s forthcoming initiatives could potentially result in significant financial losses for them.

“Mr. President is very concerned about some of the goings on in the foreign exchange market,” he said.

“One of the things we discussed is what could be done to stabilise and what could be done to improve the liquidity in the market, and also the goings on in the various other markets, including the parallel market.

“He’s concerned about its impact on the average person, since, unfortunately, a lot of activities that we do, which are purely local, are still referenced to exchange rates in the parallel market.

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“We have discussed, and I have shared with him what we’re doing to improve supply. If you look at the official market, you will find that that market has been fairly stable, and the spreads of the difference have not fluctuated as much.

“We do not believe that the changes going on in the parallel market are driven by pure economic demand and supply but are touched by speculative demand from people.

“Some of the plans and strategies, which I am not at liberty to share with you, mean that sooner rather than later, the speculators should be careful because we believe the things we’re doing, when they come to fruition, may result in significant losses to them.

“But my presence here is more about the concerns the president has and his need to know that we are doing something about it, assurances of which I have given him totally.

“We are doing things which will significantly impact the market in a few days, and we will all see it.

“The intention is to ensure the environment operates at a level that’s more efficient, but also that is very reasonable and does not have a negative impact, to the best that we can on the lives of the average person.”

Shonubi also highlighted that the CBN’s efforts are designed to create a more efficient and reasonable operating environment that positively impacts the lives of the average person. The acting governor stressed the need for stability and emphasized the CBN’s commitment to addressing the challenges posed by speculative activities.

The CBN’s move comes after its decision in June 2023 to unify all segments of the foreign exchange (FX) market, relinquishing its control over forex rates. This transition has led to the determination of the local currency’s exchange rate by market forces.

As the CBN prepares to unveil its new measures, market participants and observers are closely watching for the potential impact on the naira’s performance against the dollar and the broader implications for the Nigerian economy.

(Edited by Oludare Mayowa; omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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