Central Bank of Nigeria (CBN) yesterday raised hope of the naira rebounding further based on some drastic measures it was taking to strengthen the local currency and ensure that “speculators get punished.”
In a statement yesterday, the CBN said its measures, which particularly included mopping up excess liquidity in the system, made the naira scarce led to the rebound seen.
The naira reached N400/$ at the parallel market last week, but began a sudden gradual rebound early in the week, leaving market watchers wondering what could happened. The naira settled at less than N300/$ Thursday.
Besides, two officials of the CBN who, in a chat pleaded not to be named, indicated that the apex bank had deployed a number of measures to turn the tide in the forex market and severely punish currency hoarders and speculators.
First is the decision to publish all forex sales from the interbank market to make for unprecedented transparency.
The second, it was gathered was the mop-up operations of the CBN, which had reduced the excess liquidity behind the high speculation of the upper week, adding, “These steps are said to have made the naira ‘relatively scarce.”
There was also the decision by CBN to maintain supply of forex for school fees and medicals, which were earlier speculated to have been removed from interbank forex eligibility list, triggering panic by the public.
But another reason, being adduced by market watchers, has to do with the rising cost and drop in demand for imported goods because a good number of Nigerians are beginning to switch consumption to local goods. This is also said to have led to a significant fall in dollar demand.
The CBN had said that speculators were behind the market bubble since the upper week, which caused a free fall of the Naira sending it crashing to an all-time low of N400 to the dollar.
The CBN governor, Godwin Emefiele, had accused speculators who connived with bureau de change operators to undermine the efforts of the bank at propping up the naira and warned that the market would eventually punish such speculators.
On Thursday in Abuja, the naira at the parallel market exchanged for less than N300, a further improvement on the N305 to the dollar on Tuesday, garnering over N100 gain on the panic by speculators struggling to cut their losses.
A good number of the sellers who had suffered huge losses confessed that they had bought at the rate of N380 hoping to sell at N400 before the sudden turn in fortunes.
