The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has charged Nigerians not to panic over recent developments in the country’s foreign exchange market which has seen the Naira witness some depreciation.
He gave the admonition at a breakfast meeting with captains of industry and critical stakeholders in the economy in Lagos, assuring them that the level of Nigeria’s external reserves, which currently stands at about $34 billion, is adequate to meet all legitimate foreign demands.
The governor attributed the current depreciation to global macroeconomic developments including sustained fall in commodity prices, weak global economic recovery, geopolitical tensions and conflicts, cessation of US Federal Reserve’s quantitative easing programme and weak external demand.
While pointing out that the Naira depreciated by 11.25 percent at the interbank market between January 31, 2014 and December 31, 2014, he drew the attention of his audience to the fact that several other emerging market countries also experienced depreciation in their currencies during the period for the same reasons. These include Russia (40.43%), Ghana (25.54%), Tunisia (14.12%), Brazil (8.655) and Columbia (15.395) among others.
He said Nigeria was not alone in the currency depreciation phenomenon but quickly added that every possible step would be taken to improve the country’s standing because this is not a league to which the country wants to belong.
While also flaying the activities of currency speculators and rent-seekers, Emefiele warned that CBN would not hesitate to suspend dealership license of banks fueling speculative demand and are involved in FOREX malpractices as well as infractions.
He tasked Nigerian’s to look inwards and explore opportunities for local production of more of the country’s needs because lopsided dependence on imports was a major exacerbating pressure on the exchange rate.
Emefiele also reminded his audience that “even one percent of import impacts negatively on the exchange rate.”
The CBN governor also pledged the apex ban’s support for entrepreneurs and manufacturers who go into local production of goods that would reduce demand pressure on the Naira.
According to him, “if we are committed to a cause, there is no way we cannot grow the economy.”
He also noted that because Nigeria was still heavily dependent on imports, the Bank would continue to defend the Naira as doing otherwise would result in uncontrolled inflation, impoverished citizens, declining businesses and stunted economic growth,
Stakeholders who spoke at the event commended the CBN for the meeting and expressed great relief at the assurances from the governor over the health status of the Nigerian economy.