We’ll suspend licences of banks that breach forex market rules – Emefiele



Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, yesterday, read the riot act to banks and end users of foreign currencies, warning that the apex banking regulator would suspend their dealership licenses and bar erring companies from its foreign exchange windows if they continued indulging in speculative and forward trading on the naira.

Emefiele, who gave this warning at a stakeholders breakfast meeting on recent developments in crude oil price and foreign exchange market in Lagos, hinted the action of such operators was putting the local currency under pressure thereby precipitating its sustained depreciation against most foreign currencies.

While attributing part of the scenario to panic buying against the backdrop of the nation’s falling foreign reserves, the CBN boss advised Nigerians not to panic as its $34 billion reserve was adequate to see the country through the challenging times.

He advised: “In 2007, we had a foreign reserve of about $10 billion and the Nigerian economy did not collapse and we were still able to navigate through the period. Then why would somebody panic now that the reserves have gone up to $34 billion.”

He, however, lampooned Nigerian commercial banks, which are in the habit of speculating on naira exchange rate and making money out of it, asking if that was the reason they sought banking license.

Emefiele said the CBN has already initiated steps to carry out a comprehensive reform of the foreign currency operation to ensure that only genuine demands are met in its official foreign exchange window, pointing out that those who want to use it as an opportunity to over invoice and send money overseas or those that want to evade taxes may soon burn their fingers.

The CBN boss also warned importers that cheat through its windows that the time would soon be up for them as it would issue guidelines to curb forward trading activities that escalate exchange rate to as high as N190 to the dollar.

He argued that government was already taking steps to diversify the economy such that it would no longer be susceptible to shock like what was going on at the moment, while calling on the business community to begin to do things that could resuscitate the economy rather than continuing the massive importation syndrome of even goods that can be produced in the country and thus depleting the foreign reserves in the process.

Emefiele expressed optimism that the nation could still witness some price reversals with respect to crude oil prices, and assured the apex bank would continue to defend the economy and businesses domiciled in the country with right policies as the need arises.

Source : SunOnline

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