CBN under pressure to devalue naira again

CBN

DEVELOPMENTS in the foreign exchange market are putting the Central Bank of Nigeria under intense pressure to further devalue the naira.

The currency has been experiencing free fall since November 25, 2014 when the          CBN Monetary Policy Committee devalued it by eight per cent from 155 to 168 against the United States dollar.

Following Saturday’s announcement of the postponement of the general elections by six weeks, the naira on Monday plunged from 188 to 200 against the dollar.

The Bankers’ Committee gave the hint of further devaluation on Thursday just as the nation’s External Reserves dropped by $1bn in 12 days.

The committee which comprises the Central Bank of Nigeria governor, the deputy governors, chief executive officers of Deposit Money Banks and other stakeholders, said the managers of the economy, including the CBN, were currently seeking a new level to devalue the already battered currency.

Members of the committee met for over three hours in Lagos to review developments in the banking sector and the economy, among other issues.

The meeting, which was chaired by the CBN Governor, Godwin Emefiele, later appointed the Managing Director, Guaranty Trust Bank Plc,   Segun Agbaje; Managing Director, FCMB,   Ladi Balogun; Managing Director, CitiBank Nigeria,   Omar Hafeez; and Director, Banking Supervision, CBN,   Tokunbo Martins, to brief the press on some of its deliberations.

Agbaje said the currency was going through a period of ‘‘price discovery’’ to determine a new level for the currency.

He said, ‘‘where we are now is that oil prices are down. As a country, we are trying to find what level the currency devalues to. There is no central bank in the world that allows a free flow of its currency. What you do is try to find a price discovery and find a rate at which you can live with. I think we are going through that process in Nigeria. That is why at the last MPC meeting, the CBN devalued and also moved the midpoint of the naira. What you are seeing in the interbank market is again some price discovery.”

The GTBank boss explained that ‘‘devaluation is not a curse’’, adding that some major currencies of the world had gone through the process in recent times.

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