Forex: CBN takes action to halt the naira’s wild collapse

by Amos Kalu
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According to the Central Bank of Nigeria, fresh steps would be taken to stabilize the naira’s value relative to the dollar.

After meeting President Bola Tinubu on Monday at the State House about the bank’s efforts to stop the decline, Folasodun Sonubi, acting governor of the CBN, disclosed the information.

According to him, President Tinubu voiced his concern about the effects of recent changes in the foreign exchange market, particularly on regular people.

Folasodun Sonubi

The CBN is aggressively trying to increase market liquidity and stability, including resolving challenges in the parallel market, Sonubi said he promised the President.

Sonubi emphasized that speculative demand is also a major driver of parallel market movements in addition to economic causes.

The chief executive officer of the central bank stated that, while he would not provide specifics, we would like to caution investors about the potential consequences of the CBN’s planned measures.

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According to him, the main goal of his visit to the presidential palace was to convince the President that the CBN is acting forcefully to allay his worries.

He expressed certainty that the actions being taken will result in positive outcomes within a short period of time.

He asserts that the primary objective of the CBN is to establish an environment that is effective and reasonable and that minimizes adverse effects on the daily lives of ordinary Nigerians.

He gave the assurance that the CBN would continue to work to maintain stability and enhance the state of the economy as a whole.

The President was quoted as saying: “Mr. President is quite worried about some of the developments in the foreign exchange market. One of the topics we covered was what could be done to stabilize and improve the market’s liquidity as well as what was happening in the various other markets, including the parallel market.

“Since many of the things we do, which are totally local, nonetheless make reference to exchange rates in the black market, he is worried about how it would affect the common person.

“We talked, and I told him about the supply-improvement efforts we’re making. If you take a look at the official market, you’ll see that it’s been rather constant and that the spreads of the difference haven’t changed all that much.

“We don’t think that the changes occurring in the parallel market are being driven by purely economic demand and supply, but rather that they are being influenced by speculative demand from individuals.

“We feel that the things we are doing when they come to pass may result in large losses to them, but some of the plans and techniques, which I’m not at liberty to disclose with you, suggest that the speculators should be wary sooner rather than later.

“But my presence here is more about the President’s worries and his desire to know that we are taking action to address them; I have fully reassured him of this.

“So, I hope that was helpful. We are paying attention to it and taking action that will have a big effect on the market in a few days, and we will all notice it.

“The goal is to make sure that the environment runs at a level that is more effective while also being extremely reasonable and without negatively affecting the life of the average person, to the best of our ability”.

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