By ADEWALE SANYAOLU
For those carrying out speculative activities on the naira, this is certainly bad news as the Central Bank of Nigeria (CBN) yesterday disclosed that it has foreclosed plans on further devaluation of the naira.
The apex bank’s standpoint is coming on the heels of measures put in place to shore up the value of the naira against the United States dollar, which has been on the upscale for over two months.
Special Adviser to the CBN Governor on Communications, Mr. Ugo Okoroafor, stated this during a live television programme, Business Morning, monitored by Daily Sun in Lagos yesterday.
Recall that the CBN had in the last two months put in place some measures aimed at arresting the depreciating value of the naira.
Top on the strategy was the exclusion of about 41 items from accessing the forex window, a move that would encourage importers to begin the process of sourcing some raw materials locally in a bid to encourage local production.
He said some Nigerians had speculated that the CBN, in the face of the dwindling fortunes of the naira, would devalue the currency to provide support for it, adding that this set of people are the ones putting pressure on the naira by stockpiling dollars to now sell at a later date for huge returns.
Clearing the air on the recent policy of banks to suspend receipt of foreign currencies into domiciliary accounts, Director, Reserve Management (CBN), Mr. Lamido Yuguda, said the decision was that of the respective Deposit Money Banks (DMB) and not that of the CBN.
“The request to stop further collection of forex into domiciliary accounts is not a CBN policy but that of DMB, though it’s a step we support because it would further help to tighten the noose on currency speculators. A lot of DMBs had huge stock of dollars and other currencies in their vault as a result of the activities of speculators, who on a daily basis continued to bombard them with forex, only to return at a later date to withdraw and sell at the parallel market,” he lamented.
He argued that some set of people don’t have a reason to open a domiciliary account but only do so for speculative reasons by exchanging naira for dollars to sell at a later date when the value of dollar rises.
Okoroafor explained that domiciliary account is not the normal day to day account but an account opened essentially for the purpose of earnings, inflows, transfers and revenue generated abroad and partly little income realised locally as a result of payment by foreigners for services rendered.
According to him, the domiciliary account is not an account for currency substitution where people buy the dollars to fund the account.
He regretted that the quantum of domiciliary account balances have swelled in the last two months across the banks, stressing that a larger quantum of these funds are not through wire transfer, which he said remained a very good way to grow the domiciliary account but through cash deposits.
But a Bureau De Change operator, Mr. Harrison Owoh, said the recent policy of banks to half further receipt of foreign currencies into the domiciliary account may not achieve the intended result as the naira yesterday (Tuesday) had started appreciating against the dollar.
Owoh explained that the situation may not abate because some policies of the CBN are perceived as speculative, a reason for the steady rise of the dollar against the naira because there is increased demand for foreign currencies.
“The solution lies in the ability of the CBN to reshuffle the market and see how to get it going. A lot of people that need foreign currencies to pay school fees and for medical bills abroad cannot access it through the official window. So, they will have to source it from alternative sources, a situation that further puts the naira under pressure,’’ he stated.
Source : SunOnline