ABUJA – Federal lawmaker that represented Kaduna Central senatorial district in the 8th Senate, Senator Shehu Sani has said that the federal government’s denials that $2billion of our foreign reserve was used to reinforce the Naira and that the government borrowed N3.8trillion from the CBN ways and means in 6 months can only be cleared by Senate or House Committee on Banking and Finance.
Shehu Sani stated this against the backdrop that the local currency was reported to have lost a third of its value barely 2 weeks after strengthening to below N1000 against the US dollar.
Meanwhile, data from FMDQ shows the naira continued its downward trend against the greenback at the official foreign exchange window, closing at N1,339.23/$1 on Friday, April 26.
Precise Post recalls that some currency traders reported that the local currency sold for between N1,300 and N1,320 to the dollar on Friday.
Further recall that there were speculation that the CBN has been using foreign exchange reserves to bolster the naira grew after it was revealed that Nigeria’s forex reserves had fallen from $34.45 billion on March 18 to $32.29 billion on April 15. This depletion of the reserves by more than $2 billion in just 29 days seemingly coincided with the naira’s best run against the U.S. dollar in recent years.
Consequently, the Nigerian central bank governor Yemi Cardoso refuted claims that the bank is using the country’s foreign exchange reserves to shore up the naira. The governor attributes the decline in reserves to debt repayments and other payments, which are made because they help to maintain Nigeria’s credibility.
He reportedly denied allegations that the bank is using the country’s foreign exchange reserves to support the local currency. Instead, Cardoso attributes the decline in the reserves to debt repayments and other payments which “are made because that is also part of keeping your [Nigeria’s] credibility intact.”
However, others insist that the naira’s appreciation from a low of 1,800 NGN to 1 USD seen in early March to around 1,000 NGN to 1 USD by mid-April only occurred after the CBN’s intervention. In response to these claims, Cardoso reiterated the bank’s new approach to exchange rate management which does not include defending the naira.
“If you think back to what our overall policy and philosophy has been here, you can see it is counterintuitive. Basically, what we are encouraging for the market is willing-buyer willing-seller price discovery. Ultimately, I perceive a future where the central bank will really not need to intervene except in very very unusual circumstances,” the CBN governor said.
Cardoso acknowledged that the central bank had recently intervened by selling foreign exchange to currency exchange offices at an exchange rate below the market rate at that time. However, the CBN governor claimed that the amount of U.S. dollars involved for this exercise was “small.”
Currency traders have attributed the recent depreciation of the naira to market forces as supply has been unable to meet up with the demand.
The local currency has been on a seven-day losing streak at the official market, the longest since its crash in January, with a marginal 0.1% drop against the dollar also reported on Thursday.
Even the sales of $15.83 million to 1,583 Bureau De Change (BDC) operators by the Central Bank of Nigeria (CBN) appear to have no impact on the official market.
The apex bank had on Monday announced the sales of $10,000 to these CBN licensed currency traders nationwide at a rate of N1,021/$1 as part of its plans to aid foreign currency accessibility for qualified end users and stabilize the foreign exchange market.
These CBN’s initiatives have tempered forex scarcity, aiding the naira’s recovery from an early March rate of N1,617 per dollar to N1,072 per dollar on the 17th of April.
The Economic and Financial Crimes Commission (EFCC) had 4 days ago revealed that it has frozen over 300 accounts on suspicion of being linked to illicit forex trading which would have led to the crash of the naira within the next one week.
The EFCC Chairman, Ola Olukoyede, during an interactive session with editors and Abuja bureau chiefs of some media organizations in Abuja, said the anti-graft agency had discovered another worse scheme other than the crypto trading platform, Binance, within its system.
On April 23rd, the CBN lowered the foreign exchange rate for dollar distributions to BDCs, offering $10,000 at N1,021 per dollar, which is roughly 21% below the official rate reported by FMDQ. The move was aimed at enhancing liquidity in the unofficial market.
These CBN’s initiatives have tempered forex scarcity, aiding the naira’s recovery from an early March rate of N1,617 per dollar to N1,072 per dollar on the 17th of April.
Reacting to this back and forth, Comrade Shehu Sani who took to his X account @ShehuSani said: “First, there was a claim that $2 Billion of our foreign reserve was used to reinforce the Naira. Then there is a claim that FG borrowed N3.8 trillion from the CBN ways & means in 6 months; Both claims were denied by the FG. Only the Senate & Reps committee on Banking & Finance can Clear the air and they should.
