Worried that the Central Bank of Nigeria (CBN) is about introducing additional measures to bolster the naira, which might make them get their fingers burnt, currency speculators are reducing their bets on a devaluation of the local currency, New Telegraph has learnt.
According to forex dealers, the development is responsible for the naira trading flat against the dollar on the parallel market in the last few days. The local currency was quoted at N310 to the dollar on Friday compared with N350 to the dollar the previous week on the parallel market.
The naira oscillated between N330 and N310 to the dollar for most of last week. A currency trader told this newspaper that there was mounting speculation among forex players that the CBN was planning to announce fresh forex measures that would boost the naira.
He said: “A few weeks ago, most people were placing huge bets that the naira was going to be devalued, that is why the naira fell as low as N400 to the dollar.
But there was no devaluation. Instead, because of President Buhari’s repeated insistence that he will not support a devaluation of the naira, the feeling now is that the CBN will introduce new forex measures.
So, most dealers are no longer taking position on the naira until they have an idea about what the CBN is planning.” Industry sources said last week that in a bid to check the continued volatility of the naira on the parallel market, the CBN was planning measures to ensure that the local currency appreciates to N200 to the dollar.
A top source at the apex bank said: “The aim of CBN is to ensure that the divergence between the official and parallel rate does not exceed N3, so, we are looking at a parallel market rate of N200/$ because the downward trend in the pressure on the naira will be sustained.
“The CBN has the capacity to sustain the downward pressure and will deploy further currency management initiatives, while capitalising on fiscal policies of the Federal Government to remain in support of non-devaluation of the naira.
The current stand of the Federal Government on Nigeria’s legal tender is non-devaluation. It will be unwise for anybody to be hoarding dollars because we can assure you that naira appreciation is going to trend upwards going forward.”
Similarly, last Thursday, the Deputy Governor, Financial System Surveillance, CBN, Dr. Joseph Nnana, told a meeting of the Joint Appropriation Committees of the National Assembly with government officials on the 2016 budget that about $20 billion (N3.94 trillion) was lying idle in different domiciliary accounts of Nigerian citizens.
Nnana said: “Distinguished chairman sir, we have $20 billion lying idle in various domiciliary accounts of many customers at the various banks across the country.
“This is part of the reasons why the naira has continued to slide against the US dollar.” He alleged that some privileged Nigerians were behind the consistent slide in the value of the naira by embarking on dollar speculation to the detriment of the local currency.
He said: “The CBN will embark on aggressive liquidity mop-up to enable the naira regain confidence. The CBN will not sit down and watch the consistent fall of the naira. After the passage of the 2016 budget, the naira will begin to bounce back. Those who speculate on dollars will have their fingers burnt.”