CBN Rules Out Plan To Adjust Naira, Says It Is ‘Appropriately Priced’

By Sola Alabadan,

The Governor of Central Bank Of Nigeria (CBN), Godwin Emefiele defended the naira again on Monday, saying it is “appropriately priced” and that the CBN does not plan any adjustments in the currency for now.
Emefiele, who spoke at a conference on Africa hosted by the Financial Times in London on Monday, said that restrictions put in place in June to conserve foreign exchange reserves and support the naira were working.
As part of efforts to reduce the pressure on the Naira while preserving the nation’s external reserves, on June 23, the CBN excluded importers of 41 selected goods and services from accessing foreign exchange at the Nigerian foreign exchange markets.

Emefiele said Nigeria should focus on diversifying its economy and needed to manage what little hard currency reserves it had.
“At this time … the currency is appropriately priced,” Emefiele told the Summit.

“(People) are asking me whether I am ready or not for an adjustment, and I tell them: At this time, no adjustment,” he said. He added he was looking at various options but gave no details.

The restrictions were effective, Emefiele said, adding: “It is working and people should have patience with us.”
Vice President Yemi Osibanjo had at the weekend assured that the country would keep restrictions on foreign currency for the time being to preserve reserves but promised to relax them eventually.
Nonetheless, the CBN Governor said he will consider easing restrictions on currency trading in the country if demand for foreign exchange drops further.

“Once we have achieved a result, we can allow ourselves to look at a freer market,” the governor said.

With the backing of President Muhammadu Buhari, Emefiele has resisted calls to ease the controls and devalue the naira despite criticism from investors, businesses and fellow members of the Monetary Policy Committee.

The restrictions have reduced liquidity, prompting JPMorgan Chase & Co. to remove the nation’s bonds from its emerging-market bond indexes last month.

“I think it’s working and I think you should be patient with us,” Emefiele said. “Demand for foreign exchange has dropped.”

Meanwhile, the apex bank on Monday weakened its official exchange rate peg on the Lagos interbank market to N197 per dollar from N196.95 it set last week. It was the seventh adjustment since the regulator introduced tight currency controls in February.

However, no reason was given for the adjustment, which traders said was made through a message. The naira traded weaker in the parallel market to N223.