By Yakubu LAAH InvestAdvocate
Lagos (INVESTADVOCATE)-Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) has said the current $34 billion Nigeria’s external reserve is adequate to meet all legitimate foreign exchange demands.
Emefiele made this disclosure on Tuesday at a breakfast meeting with captains of industry and critical stakeholders in the economy; coming on the heels of recent developments in the country’s foreign exchange market, which has adversely affected the naira.
This he attributed to the current depreciation to global macroeconomic developments including sustained fall in commodity prices, weak global economic recovery, geopolitical tensions and conflicts, cessation of the US Federal Reserve’s quantitative easing programme and weak external demand.
According to the CBN governor, despite the fact the naira went down by 11.25 percent at the interbank market between January 31, 2014 and December 31, 2014, he noted that several other emerging market countries also experienced depreciation in their currencies during the period for the same reasons. These include Russia (40.43 percent), Ghana (25.54 percent), Tunisia (14.12 percent), Brazil (8.65 percent), and Columbia (15.39 percent) among others.
Emefiele pointed out that Nigeria is not alone in the currency depreciation trend, “every possible step would be taken to improve the country’s standing because this is not a league to which the country wants to belong,” he affirmed.
He warned that the CBN would not hesitate to suspend the dealership licences of banks that engage in speculative demand and are involved in FOREX malpractices as well as infractions.
The CBN’s governor advised Nigerians to look inwards and explore opportunities for local production of more of the country’s needs because lopsided dependence on imports was a major exacerbating pressure on the exchange rate. “Even one cent of import impacts negatively on the exchange rate,” Emefiele added.
In the same vein, he pledged the CBN’s support for entrepreneurs and manufacturers who go into local production of goods that would reduce demand pressure on the naira. “If we are committed to a cause, there is no way we cannot grow the economy,” he advised.
Emefiele reiterated the central bank’s resolve to defend the naira as doing otherwise would result in uncontrolled inflation, impoverished citizens, declining businesses and stunted economic growth; due to Nigeria’s heavy dependency on imports.
