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Forex: CBN moves to stop naira free fall

14th August 2023

Folasodun Sonubi,

By Deborah Tolu-Kolawole
The Central Bank of Nigeria has said it is set to take new measures to stabilise the naira
against the dollar.

Acting Governor of the CBN, Folasodun Sonubi, made the disclosure to State House
Correspondents after briefing President Bola Tinubu on what the bank was doing the halt the
slide on Monday at the State House.

He said President Tinubu expressed his concern about the impact of recent developments in
the foreign exchange market, particularly on ordinary citizens.

Sonubi said he assured the President that the CBN is actively working to improve liquidity
and stability in the market, including addressing issues in the parallel market.

Sonubi stressed that the fluctuations in the parallel market are not solely driven by economic
factors, but also by speculative demand.

The apex bank governor said while he would not disclose specific details, he warned
speculators that the CBN’s upcoming initiatives could potentially lead to significant losses for
them.

He said the primary purpose of his presence at the presidential villa was to reassure the
President that the CBN is taking decisive action to address the concerns raised.

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He expressed confidence that the measures being implemented would yield positive
outcomes within a few days.

According to him, the CBN’s ultimate goal is to create an efficient and reasonable operating
environment that minimise negative impacts on the average Nigerian’s life.

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He assured that the CBN remains committed to ensuring stability and improving the overall
economic landscape.

He said: “Mr President is very concerned about some of the goings on in the foreign exchange
market. One of the things we discussed is what could be done to stabilise and what could be
done to improve the liquidity in the market and also the goings on in the various other
markets, including the parallel market.

“He’s concerned about its impact on the average person, since, unfortunately, a lot of
activities that we do, which are purely local, are still referenced to exchange rates in the
parallel market.

“We’ve discussed and I’ve shared with him what we’re doing to improve supply. If you look at
the official market, you’ll find that that market has been fairly stable and the spreads of the
difference have not fluctuated as much.

“We do not believe that the changes going on in the parallel market are driven by pure
economic demand and supply, but are touched by speculative demand from people.

“Some of the plans and strategies, which I’m not at liberty to share with you, means sooner
rather than later, the speculators should be careful because we believe the things we’re
doing, when they come to fruition, may result in significant losses to them.

“But my presence here is more about the concerns the President has and his needs to know
that we are doing something about it, assurances of which I have given him totally.

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“So I hope this helps. We are looking at it and we’re doing things that will significantly impact
the market in a few days time and we will all see it.

“The intention is to ensure the environment operates at a level that’s more efficient, but also
that is also very reasonable and does not have a negative impact to the best that we can on
the lives of the average person.”

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