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Nigeria: No Plan to Devalue Naira - Central Bank

March 13, 2020

 

 

Despite a slump in the global economy as a result of the negative impact of the coronavirus pandemic, the Central bank of Nigeria (CBN) on Thursday insisted the time was not ripe for the call for the devaluation of the Naira.

 

Since the breakout of the deadly virus, the world economy, including that of the United States and Europe, has been unsettled, with most economic activities virtually grounded.

 

Crude oil prices at the international market have nosedived to unprecedented low levels.

 

In a few days, crude oil prices, which averaged $51.81 per barrel, declined close to $30 on a day the world now remembers generally as 'Black Monday."

 

With the Organisation of Petroleum Exporting Countries (OPEC) failing to reach a deal with its Non-OPEC allies last Friday on further production cut, the consequence could only be imagined.


 
The proposal by OPEC to cut output by another 1.5 million barrels per day in addition to the previous 2.1 million barrels per day was the group's attempt to strengthen the market and boost crude oil price.

 

But, the resistance by their allies, led by Russia, torpedoed the effort and exposed the market to the worst price decline since 2016.

 

Nigeria, which was already grappling with a low production capacity, is facing a different challenge, with oil price dropping by almost 50 per cent of the benchmark approved in the 2020 Federal Budget.

 

The prospect of a massive drop in oil revenue not only pushed the country's economy into another tailspin but has led to pressures of a huge budget deficit and call for the devaluation of the Naira.

'Time not ripe'

Regardless, the CBN in reaction to recent calls for the devaluation of the Naira in response to the current global economic challenge said the time was not ripe for such an intervention.


 
"The Central Bank of Nigeria wishes to note with displeasure, the rumours and speculative activities of unscrupulous players in the foreign exchange market, borne out of the impression that the CBN is on the verge of devaluing the Naira, and triggering panic in the FX Market," the apex bank said in a statement by its spokesperson, Isaac Okorafor

 

"These rumours are false, unwarranted and calculated to serve their dubious and selfish ends," Mr Okorafor added.

 

The CBN said it has commenced investigations in collaboration with the Nigerian Financial Intelligence Unit (NFIU) and related agencies to uncover the unscrupulous persons and FX dealers "behind the panic call".

 

Further threats

 

The bank threatened to unleash the full weight of its rules and regulations against those behind the culprits, including, but not limited to, being charged for economic sabotage.

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