The Central Bank of Nigeria may be compelled to again take action to halt the continued slump in the value of the Naira, as the national currency on Monday lost N3 to the dollar.
Bank insiders say the Naira may be devalued yet again.
The Naira depreciated at the black market, selling at about N213 to the dollar, from N210 at the Bureau De Change (BDCs) segment of the official market.
A BDC operator said the depreciation in the value of the national currency might not be unconnected with the closure of trading at the interbank market by the CBN.
The dealer also said the CBN’s decision, which was meant to control speculative activities of some operators in the market, might be responsible for the depreciation.
The Naira also traded against the pound at the BDCs and at the black market for N307 and N314 respectively.
It, however, exchanged against the Euro at N235 at the BDCs, while being sold for N237 at the black market.
In recent times, the CBN Governor, Godwin Emefiele, said only BDCs and banks with genuine demand would be allocated foreign exchange.
At the peak of the dwindling global crude oil prices, the CBN had intervened November 2014 by devaluing the national currency by eight per cent, from N155 to N168.
In January, following the threat by JP Morgan to delist Nigeria from the emerging market indices on the ground that the country’s foreign exchange and the local bond market were not liquid enough, Mr. Emefiele had said the CBN would do everything within its mandate and capacity to keep Nigeria on the index.
He said the CBN would continue to monitor and review the liquidity level in the market and would not hesitate to intervene to protect the national currency whenever illegal activities were detected in the market.
“If at any time it is discovered that the market is unable to absorb or provide the needed liquidity, the CBN would intervene in the market to provide the liquid needed for legitimate transactions to continue,” the CBN governor said.
In the wake of the Independent National Electoral Commission’s decision last week to reschedule the national elections by six weeks, the pressure appears to have started mounting again on the Naira, heightening fears that the CBN may be compelled to intervene again by further devaluing the Naira.
Top officials of the Bank rallied on Monday to allay fears among investors.
According to the officials, although the country’s currency rate between June 2014 and January 2015 showed a negative change of minus 6.67 per cent, the trend is not peculiar to Nigeria.
The officials, who would not want to be identified, as they were not authorized to speak on the issue, said the experience in Nigeria was not different from what was obtained in most other oil producing countries in Africa and other parts of the world.
For instance, Malaysia’s currency (Ringgit) exchange rate has dropped by minus 12.15 per cent, moving from 3.21MYR in June 2014 to 3.60MYR in January, 2015, while Brazil, which is also a developing economy like Nigeria, has seen her national currency (Real) declining by minus 29.41 per cent from 2.21BRL to 2.86BRL during the corresponding period.
In Angola, the national currency (Kwanza) has been down by minus 7.14 per cent, from 97.58AOA in June 2014 to 104.55AOA in January 2015, same as Ghana, which Cedi dropped by minus 0.90 percent, from GHC3.35 to GHC3.38 during the period under review.
Even South Africa, the second biggest economy in Africa after Nigeria, though not an oil-producing economy, has also seen the exchange of its national currency (Rand) down by minus 10.92 per cent, from ZAR10.83 in June 2014 to ZAR11.77 in January 2015.
According to the CBN officials, as the regulatory authorities are still watching the performance of the Naira against the dollar and other global currencies, the Bank may be compelled to exercise its regulatory responsibility if the attacks from speculative activities from the foreign exchange market continue to take its toll.
“Nigerians may be hearing a big statement soon,” they hinted.
Market analysts have interpreted the statement by the officials to mean that another devaluation of the Naira may be in the offing on or before the next monetary policy committee meeting next month, as the value of the Naira continues to nosedive.
Since the devaluation late last year, the Naira has continued to trade outside the official threshold of N160 to N176 at the interbank foreign exchange market, with the exchange going for as high as N213 to the dollar on Monday.