By InvestAdvocate
Lagos (INVESTADVOCATE)-Godwin Emefiele, governor of Central Bank of Nigeria (CBN) on Thursday advised banks not to panic as there would be no more naira devaluation, a move that drains billions of dollars from the financial sector, a Reuters report quoted him as saying in an interview.
According to the report, the CBN governor said he was ready to inject liquidity if needed into the interbank market, which dried up this week following a directive to government departments to move their accounts into a “Treasury Single Account” at the central bank.
This is coming on the heels of President Muhammadu Buhari’s drive to fight corruption, which industry analysts say it could take away as much as 10 percent of Nigeria’s banking sector deposits impacting on banks’ liquidity ratios.
The report says amid confusion over implementation of the policy, overnight interbank lending rates spiked to 200 percent this week, but Emefiele denied the policy had provoked a liquidity crisis.
He declared there is no shortage of liquidity; but an oversubscribed sale of treasury bills on Wednesday. “A spike is a momentary action. It’s sentiment,” he said.
The CBN governor according to Reuters said less than one trillion naira ($5 billion) would be moved into the single account but did not give details.
The report said that Emefiele was insistent on maintaining the naira currency – which has dipped in the past year due to dwindling oil revenues – at its current level of 197 to the dollar.
“There will not be devaluation because right now the currency is appropriately priced,” he said.
In its unconventional interventions to protect the naira, the CBN has blocked access to foreign currency to import items ranging from soap and toothpicks to cement and private jets.
He added that the list of restricted items could be expanded to encourage local production.
President Buhari on Wednesday told France 24 in an interview that he does not think the nation’s local currency the naira should be devalued again.
“I don’t think it is healthy for us to have the naira devalued further. That’s why we are getting the central bank to make modifications in terms of making foreign exchange available to essential services, industries, spare parts, essential raw materials and so on — but things like toothpicks and rice, Nigeria can produce enough of those,” he said.
