The Governor of the Central Bank of Nigeria, Mr. Lamido Sanusi, has said that the 2.3 per cent loss recorded in naira’s value is not significant, compared to what other emerging markets lost this year.

Sanusi, who spoke at the 75th anniversary of the Ikoyi Club in Lagos, said every emerging market had lost over 10 per cent of its currency value this year, except Nigeria.

He said, “The naira has been stable between January and August; it lost 2.3 per cent of its value. Everyone has been complaining that the naira lost 2.3 per cent.

“When you look at the South African rand, it lost 17 per cent; the Indian rupee lost about 20 per cent as well; the Indonesian rupiah lost 12 per cent; and the same with the Brazilian currency.

“Every single emerging market and frontier market currency that you can think of has lost value in excess of 10 per cent. We’ve had a stable currency. And to preserve this, we have reserves in excess of $45bn…There has been complaint on that.”

The naira fell the most on Monday in more than 18 months as the CBN held its last currency auction before the implementation of tightened controls of the sales.

According to a Bloomberg report, the naira retreated by 1.1 per cent to N161.55 per dollar in Lagos on Monday, its biggest drop since January 2012 on a closing basis.

This brought its decline this month to 0.1 per cent and pared a quarterly gain of 0.6 per cent.

The CBN will also replace its scheduled wholesale foreign exchange sales (Wholesale Dutch Auction System) with retail auctions (Retail Dutch Auction System) from October 2 (today) to curb dollar demand.

The central bank offers foreign currency twice a week to keep the naira within a range of three percentage points above or below 155 per dollar. The regulator sold $300m on Monday, compared with $300.2m on September 25.

Sanusi maintained that the economy was in a good condition and that the economic outlook indicated that things would continue to be stable in the country.

He added, “From January till date, for the first time since 2008, we had a consistent stretch of inflation at below 10 per cent. Last month, it was 8.2 per cent. They said that by the end of this year, we would be under eight per cent and we would keep inflation in single digit throughout 2014.”

On complaints that banks were not lending to the real sector, the central bank governor said various challenges facing the real sector would prevent it from making reasonable profits even if its operators got loans from the banks.

He argued it was better to keep the naira’s value stable rather than keep interest rate very low at the expense of the naira.

Sanusi said, “So, if people say banks are not lending to the real sector, I say where is the real sector without electricity, without infrastructure, without competent and highly skilled labour, without security? Where is the viable real sector in the economy? Is it the tomato farmer who is going to use 40 per cent to 50 per cent of his output in the farm on the market because there is no storage and other things? Is that good economics? Is it the textile firm that has to provide its own generator, provide its own security, provide its own transportation, build its own road before it can be a real sector?”

He added, “The first thing I begin to talk about when we complain about interest rate is to say are we in this situation because of what the central bank has done? Or are we in this situation in spite of the best effort of the central bank?”

Source: Punch (by Oyetunji Abioye)