Don't Miss

CBN resumes direct intervention to save naira

By on September 28, 2013

In a bid to save the naira, the Central Bank of Nigeria has resumed direct intervention by selling dollars to end users in the market.

Our correspondent gathered on Thursday that the regulator took the decision in order not to devalue the naira.

There had been speculation that the CBN would devalue the naira, thereby fuelling excessive demand of the currency.

The naira had last week lost 1.63 per cent to trade at N163.11 to the dollar at the inter-bank market, representing its lowest value in 15 months.

A reliable source in the CBN told our correspondent, “The CBN has resumed intervention by selling dollars to end-users. The bank has a dealing whereby it sells to the Wholesale Dutch Auction System, but very rarely sells to end-users directly.

“If the market is tight, they can sell or buy from end users, but it is uncommon. The implication is to increase supply and make the naira appreciate.”

The CBN Governor, Mr. Lamido Sanusi, had said on Tuesday that he would do everything possible to defend the naira and ensure its stability, including using the nation’s foreign reserves to achieve the purpose.

Sanusi said after the Monetary Policy Committee meeting in Abuja, “As far as the naira is concerned, we have always said we are committed to its stability. I have not heard any economic argument that there is any economic value in devaluing our currency. My view and that of the CBN is that if we need to tighten money, use some of our reserves to support the economy, we will. No central bank governor will say he will support the currency at all cost.

“But we want to be very clear that there is no country that allows its currency to just be determined by the market. We are not looking for a stronger currency neither are we looking at a weaker one. People want to pay fees and investors want to know if they will have returns on investments.

“We will use the reserves, we will use interest rates, we have gone through difficult months; hopefully, the next few months will not be difficult. We will not allow the naira to be weakened and we are committed to that.”