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CBN in market to defend naira

By on November 11, 2014

The Central Bank of Nigeria is currently intervening with dollar sales in the foreign exchange market to support the ailing naira currency, the Deputy Governor, Monetary Policy, CBN, Dr. Sarah Alade, has said.

Alade said the naira which had lost around six per cent so far, had been trading outside its preferred band for some time now, but that the bank would continue to defend the currency.

The local currency rose to N169.70 on central bank intervention after hitting N173.05 in mid-morning trade against the dollar.

“We would continue to defend the currency, we have always said that,” Alade told Reuters by telephone, adding that the bank was comfortable with level of the country’s foreign reserves of around $38bn.

Asked how far the bank was willing to go to defend the naira, she said: “The markets would dictate that.”

She said that the last time the country devalued its currency, oil prices were lower than now, even though the price is declining.

“At the last time we did that (devalued), we didn’t have the kind of oil prices that we have now, so we are still comfortable,” Alade said.

The currency has come under pressure in the past two months from falling global oil prices, dampening the appetite for assets in the economy.

The naira has touched new intraday lows nearly every trading session on strong dollar demand partly from foreign investors unnerved by falling oil prices, exiting Nigeria and from domestic importers, worried about the risk of a currency devaluation.

 

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