FX market volatility: CBN mulls new measures to curb speculators’ antics

The Central Bank of Nigeria (CBN) on Tuesday indicated its plans to take new measures to stabilize the Naira against the US dollar in furtherance of its measures to ensure that the FX rates unification policy impacts positively on the nation’s economy.

The Acting Governor of the apex bank, Folasodun Shonubi, made the disclosure to State House Correspondents after briefing President Bola Tinubu on what the bank was doing to halt the sustained depreciation and disparity of the local currency at the official and unofficial markets.

The Acting Governor, who said that the President expressed his concerns about the impact of recent developments in the FX market, particularly on ordinary citizens, during the meeting, said he assured the President that the CBN was seriously working to improve liquidity in the official FX market and also addressing issues in the parallel market.

Reiterating his earlier position that the fluctuations in the parallel market were not solely driven by economic factors, but also speculative demand, Shonubi explained that while he would not disclose specific details of the issues discussed with the President, he warned speculators that the apex bank’s yet-to-be unveiled initiatives could potentially lead to significant losses for fraudulent dealers in the FX market.

The banker said that the primary purpose of his visit to the President was to reassure him that the CBN was taking decisive action to address the concerns raised and expressed optimism that the measures being implemented would yield positive outcomes within a few days.

Shonubi, who further clarified that the apex bank’s ultimate goal was to create an efficient and conducive operating environment that would minimise negative impacts of the FX policy on the average Nigerians life, assured Nigerians that the CBN remained committed to ensuring stability and improving the overall economic landscape for their wellbeing.

The banker said: “Mr President is very concerned about some of the goings on in the foreign exchange market. 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.

“We’ve discussed, and I’ve shared with him what we’re doing to improve supply. If you look at the official market, you’ll 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’m not at liberty to share with you, means 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 needs to know that we are doing something about it, assurances of which I have given him totally.

“So I hope this helps. We are looking at it and we’re doing things which will significantly impact the market in a few day’s time 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 also very reasonable and does not have a negative impact to the best that we can on the lives of the average person”, the Acting Governor added.

See also $20bn Dangote Refinery to import crude oil from United States

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