CBN Sends Warning Message to Black Market Dealers over Hike in Dollar to Naira Exchange
The Central Bank of Nigeria (CBN) has issued a caution to individuals operating in the black market, indicating that the measures it plans to implement could result in financial losses for them. This announcement was made by the Acting Governor of the CBN, Folashodun Shonubi, on August 14, 2023.
Shonubi elaborated that the primary objective behind the decision to float the naira was to attract foreign investment into Nigeria. In response to the decline of the naira on the black market, the CBN has initiated measures to intervene in the foreign exchange (Forex) market, aiming to curb the activities of currency dealers and speculators.
In a conversation with journalists at the State House in Abuja, Shonubi shared the development after a meeting with President Bola Tinubu. The CBN anticipates that the proposed actions could lead to financial setbacks for those involved in the black market.
Shonubi stated that his purpose in meeting with the President was to communicate the CBN’s efforts to counteract the decline of the naira. He addressed President Tinubu’s concerns about the impact of recent Forex market shifts, particularly on the Nigerian population.
Shonubi highlighted that the instability of the naira in the black market is not solely influenced by economic factors but also by speculative demand. He cautioned speculators about the potential severe losses they might incur as a result of the planned interventions.
The meeting with the President was also intended to assure Tinubu that the CBN is taking decisive steps to tackle the issues at hand. Shonubi expressed confidence that the measures would yield positive outcomes within a few days.
He further revealed that the CBN’s ultimate goal is to create an efficient operating environment that minimizes negative effects on the lives of Nigerians.
Shonubi conveyed, “President Tinubu is deeply concerned about the recent developments in the foreign exchange market. Our discussions focused on strategies to stabilize and enhance liquidity in the market, as well as addressing the situations in other markets, including the parallel market. He is particularly concerned about the implications for everyday citizens, given that many local activities are still linked to exchange rates in the parallel market.”
A report from Punch disclosed that the CBN has commenced the implementation of measures to alleviate pressure on the naira within the black market. The CBN released a circular to currency dealers, international money transfer operators (IMTs), and the general public.
The circular, dated August 9, 2023, signed by the Director of Trade and Exchange Department, Ozoemena Nnaji, sets limits on the naira payout for diaspora remittances. The directive instructs operators to offer naira payouts within a range of -2.5% to +2.5% of the previous day’s average rate on the Investors’ and Exporters’ (I&E) window.
The depreciation of the naira prompted the CBN to implement measures aimed at removing barriers that discourage foreign investors. However, the anticipated influx of dollars has been slower than expected, even though the last two months saw a substantial inflow of $2.5 billion.
The absence of CBN interventions in the Forex market has contributed to the significant devaluation of the naira in both official and parallel markets.
