The Central Bank of Nigeria (CBN) has explained that the recent trip by its governor, Godwin Emefiele, and his deputy, Sarah Alade, to Britain and the United States is to allay fears by foreign investors about the nation’s economy and to win back their confidence.
This was stated by CBN director, Corporate Communications, Mr Isaac Okorafor, who said the trip was mainly to explain the dynamics of Nigeria’s new exchange rate regime and to inform the investors that the nation’s forex market was no longer being controlled by the CBN.
The CBN last month removed the 16-month-old N197-per-dollar peg on the naira it had brought in to try and control its fall as crude prices plummeted. Investors welcomed the move but many said they would still steer clear until Africa’s biggest economy shows signs of concrete recovery.
According to a source at the apex bank, “It was more like a roadshow to get investors back into the country. The CBN is particularly keen to boost dollar liquidity in the country.”
It was also learnt that several investors in London told the CBN team that there was not enough liquidity in Nigeria’s foreign-exchange market for them to be comfortable buying naira bonds. But Emefiele was said to have faulted their claims, adding that the apex bank no longer controlled the currency’s exchange rate even after its 30 percent devaluation against the dollar on June 20.
It was learnt that Emefiele expressed surprise that the foreign investors regarded the black market as a gauge, saying it was too small to be a true measure of the naira’s value.
Investors were said to have told him that they were concerned that the central bank had lower reserves than its stated figure of $26.4 billion because it might have sold some of the currency on the forwards market.
The naira tumbled to a record low of 295.25 in thin trades against the dollar on Friday after the central sold dollars to try and boost liquidity on the interbank market, traders said.