Economists have always postulated that the strength of a nation’s economy is reflected in the value of its currency. It could be therefore understandable why Nigerians have in the last few months followed with anxiety and even concern how the nation’s currency, the Naira, continued to nose dive in value against most of the world’s major currencies, especially the US dollar. The national currency, which was quoted at about N300 to 1 US dollar in August 2016 at the parallel market ,plummeted to its worst showing in more than 30 years, when it exchanged in the black market for about N517 Naira to a dollar about two weeks ago. After several interventions to save the national currency, the latest action of the CBN appears to be yielding positive result with Naira selling for N400 to a dollar or even less the value at the open market since the recent policy of the apex bank to firm the national currency. The latest foreign exchange policy actions of the CBN, which avails the market liquidity and seeks to alleviate the sufferings of forex users as well as promote efficiency in the market, have continued to elicit positive reactions from the market .The new CBN directive, which abolished the foreign exchange preferential treatment it accorded the manufacturing sector, absorbs retail forex sales for retail users and reduce the tenor of foreign exchange denominated transaction ,has expectedly began to generate interests among operators in the economy and analysts alike. The move is aimed at easing access to foreign exchange by Nigerians as well as to foster a more efficient and competitive FX market, despite its decision to eliminate the preferential treatment, which required banks to allocate 60 per cent of FX purchases from all sources to the manufacturing sector. Despite the elimination of the preferential FX allocation regime, the apex bank maintained that the provision of FX to the manufacturing sector would remain its strong priority. This may soothe nerves amongst operators in the manufacturing sector whose major bane was inability to access FX for machinery and spare parts imports. True to its words, the CBN has provided direct additional funding to banks to meet the needs of Nigerians for personal and business travels, medical needs and school fees. The CBN expects such retail transactions to be settled at a rate not exceeding 20 per cent above the interbank market rate. The CBN has sincethen embarked on special wholesale intervention forward sales in the interbank FX market which is impacting positively on the markets and the economy .While it offered as much as $500 million last Tuesday, the 23 banks were only able to buy $370, 810.79 to meet” the visible and invisible requests of the customers.” The bank had also sold $80 million to banks to meet the demands of their customers who had applied for FX for school fees, medicals, and business and basic travel allowances, out of the $125 million uncleared backlog for invisibles. These are besides spot sales of $1.5 million to four banks and the offer of $41 million for sales out of which $35 million was taken up for the payment of school fees, medical
bills and personal and business travel allowances. In all, the CBN had sold $491.8 million to commercial banks and authorised dealers in the market as at Tuesday. Following the actions of the CBN, the exchange rate of the dollar to the naira continued to slide. In fact, the value of the national currency has been rising unabatedly since the announcement of the new policy. For instance, the dollar which was sold for N525 at the parallel market on Monday before the announcement, tumbled to N501/$1 on Wednesday. As at the close of business on Friday, it closed at N450/$, stronger than the N480 to the dollar from the previous day, amassing a gain of N75/$ after the announcement, thereby signalling renewed confidence in the forex market. With the Naira rapidly and daily gaining value, speculators, many of whom have lost millions of naira, are now wary of buying dollars at higher rate. The CBN in its determined effort to ensure that the naira continued to increase in value pumped dollar into the BDC market with each operator getting $8,000. While the CBN is doing its best to shore up the Naira disturbing reports have it that a chunk of the parallel market operators are trying to slow down the fall of the dollar to mitigate the heavy losses they are currently suffering. It was gathered that many of them had bought huge volumes at over N500/$ with the thinking that the naira will continue to fall, only for CBN to dramatically intervene, leading to the naira gaining substantially against the dollar. The new policy, though seen by a few as a policy reversal, couldn’t be coming at a better time. This is because the country’s foreign reserves has been on the increase lately, and it is still basking in the success of an oversubscribed $1 billion Eurobond. It is noteworthy that following the success of the $1 billion Eurobond, Acting President, Yemi Osinbajo, late Wednesday wrote to the National Assembly requesting permission to float another $500 million Eurobond. The new policy is a welcomed development, as it has doused the criticisms that trailed the introduction of the preferential treatment when it was introduced last August, and vindicated those who described it as unsustainable. The former preferential forex directive could be said to have failed to impact the sector it planned to support. Compliance concerns trailed the policy while it was in effect and many operators in the sector, who initially welcomed its introduction later lamented that it didn’t benefit them. While we are commending the CBN for its bold and decisive policy which is impacting positively onthe Naira which was losing its credibility in international trade and transactions, there is the need to monitor the activities of market speculators who have done more harm to the nation’s economy. The market speculators have been feeding fat from the plunge of Naira ; and their shylock conduct contributed more to the poor state the national currency was subjected to. They should not be given the latitude to do more damage to the currency and the economy as a whole.

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