“Changes in Parallel Market Driven By Speculative Demand”: CBN Hints of Plan to Stabilise Naira

“Changes in Parallel Market Driven By Speculative Demand”: CBN Hints of Plan to Stabilise Naira

  • The Central Bank of Nigeria has said it is planning to stop the free fall of the naira
  • According to the apex bank, the changes in the parallel market are affected by speculative demand
  • The CBN also warned that planned initiatives might potentially result in significant losses for speculators

The Central Bank of Nigeria (CBN) has assured that some steps will be taken to stabilise the naira's value relative to the dollar.

The disclosure was made by Folasodun Sonubi, the acting CBN governor, to state house reporters after he briefed President Bola Tinubu on the bank's efforts to stop the slide, on Monday, 14th August, 2023.

CBN governor
The acting CBN governor warned speculators that the CBN's planned initiatives might result in huge losses for them. Photo credit: CBN
Source: Facebook

Sonubi said President Bola Tinubu voiced concern about the effects of recent changes in the foreign exchange market, particularly on regular people.

Read also

Students, businesses struggle to get dollars from banks amid forex shortage

Legit.ng had earlier reported that Nigeria's central bank abolished the country's multiple exchange rate system and effectively floated the naira.

PAY ATTENTION: Join Legit.ng Telegram channel! Never miss important updates!

Reports also indicate that despite the naira float, the currency continues to record losses in the black market as the disparity between the official and black markets widens.

CBN is working to resolve challenges

According to Sonubi, in a Punch report, the CBN is aggressively trying to increase market liquidity and stability, including resolving challenges in the parallel market.

Sonubi emphasised that speculative demand is also a component in the oscillations in the parallel market, in addition to economic causes.

About his discussion with the president, he stated:

We’ve discussed, and I’ve shared with him what we’re doing to improve supply. If you look at the official market, you’ll find that that market has been fairly stable, and the spreads of the difference have not fluctuated as much.

Read also

“N720 per litre”: Kenya president makes U-turn, resumes fuel subsidy, NNPC breaks silence on new petrol price

We do not believe that the changes going on in the parallel market are driven by pure economic demand and supply, but are touched by speculative demand from people.

The head of the apex bank warned speculators that the CBN's planned initiatives might result in considerable losses for them, even though he did not provide specifics.

He claimed that the primary goal of his visit to the presidential mansion was to reassure President Tinubu that the CBN was acting forcefully to ease his worries, stating his belief that the actions being taken would soon produce fruitful results.

Sonubi asserts that the CBN's ultimate objective is to establish an effective and reasonable operating environment that minimises adverse effects on the daily lives of ordinary Nigerians.

Investigator probes CBN staff, NIBBS, NSPMC as bank’s personnel loans hit N40 billion

Legit.ng earlier reported that tensions are rising in the financial system as the administration of President Bola Tinubu resolves to bring to book those found culpable in the past nine years at the Central Bank of Nigeria (CBN).

The President appointed Jim Obazee on July 28, 2023, as a Special Investigator of the CBN and related entities.

Source: Legit.ng

Online view pixel