CBN Finally Reveals Why Naira Is Crashing Heavily Against US Dollars in a New Report
- The Central Bank of Nigerian has provided an explanation for the poor performance of the Nigerian currency
- The apex bank gave this explanation in a new report published on Thursday obtained by Legit.ng
- CBN's explanation is coming amid the heavy depreciation of the Nigerian currency at the unofficial market
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The Central Bank of Nigeria has blamed the Nigeria National Petroleum Corporation Limited (NNPC) for the poor performance of the Nigerian currency.
According to the CBN, the non-remittance of dollars to foreign reserves by NNPC is responsible for the naira’s free fall in the official and parallel markets.
The CBN stated this in a report published on Thursday, the Nation reports.
NNPC and its subsidiaries are the sole managers of crude oil which accounts for more than 80 per cent of Nigeria’s Foreign Exchange (forex) earnings.
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As at the close of business on Thursday, 28 July, the naira traded for N700/$1 at the parallel market and N415.96/$1 at the official market.
Details of CBN report
In the CBN report titled The Forex Question in Nigeria: Fact Sheet, the apex bank disclosed that domestically, there has been zero dollar remittance to the country’s foreign reserve by the NNPC, insisting that the CBN does not print dollars.
The report states:
“As noted by the CBN Governor, Godwin Emefiele, monetary policy alone cannot bear all the burden of the expected adjustments needed to manage these difficulties. It’s our collective duty as Nigerians to shore up the value of the naira.”
The bank noted that the past six years have been characterised by two recessions triggered by a slowdown in the global economy as well as the effects of COVID-19.
These, it said, were further accentuated by sharp declines in the prices of crude oil, the major source of Nigeria’s foreign exchange.
We don't print foreign currencies
On the key facts about the economy, the apex bank said it issues legal tender in Nigeria (naira) and does not print foreign exchange. It said the pressure on the naira has both local and global perspectives.
CBN said:
“There is un-abating demand for foreign exchange for both goods and services, thereby creating a demand challenge.
"The current exchange rate of the Naira, like other major currencies, is not driven by cryptocurrencies, given the volatility in the cryptocurrency space, which lost over two trillion in the past two years in face of high inflation.
“The United States (U.S.) dollar is gaining against all major currencies of the world. The imbroglio in Nigeria’s tertiary educational sector has triggered an exodus of students from Nigeria schools, with its attendant payment of fees in foreign exchange. Summer travels by Nigerians has also impacted on the demand side of the foreign exchange market."
According to the apex bank, Nigeria is not producing, hence the propensity to import is directly affecting the value of the Naira but the apex bank has attempted to address the challenge through policies.
CBN preaches hope as Naira fall to its lowest level in history to US dollars
Meanwhile, the Central Bank of Nigeria has assured Nigerians that the current Naira depreciation will soon be over.
The assurance is coming from Michael Adebayo Adebiyi, CBN’s director, research department, at the Chartered Institute of Bankers of Nigeria (CIBN).
He gave various reasons why Nigerians should be hopeful in the coming months while listing policies in place.
Source: Legit.ng
