The Central Bank of Nigeria (CBN) is planning to unveil a new policy that would help address the fluctuations in the naira, in order to check the volatility of the country’s currency in the exchange rate market. The new policy, expected to be announced in two weeks, would see the apex bank reducing the official exchange rate of the naira to N156 per dollar. The official rate is N150 to a dollar but the bank’s policy currently is to maintain the naira within three per cent either below or above the N150 level. The apex bank governor, Sanusi Lamido Sanusi, disclosed this yesterday in Abuja during a programme to commemorate 50 years of capital market regulation in Nigeria. The conference, which was organised by the Securities and Exchange Commission was attended by minister of trade and investment, Mr Olusegun Aganga, Mr. Sanusi, director-general of the SEC Ms. Arunmah Oteh, and the commissioner for insurance, National Insurance Commission, Mr Fola Daniel. Others are the country representative of the African Development Bank, Dr Ousmane Dore; the director-general, National Pension Commission, Dr Mohammed Ahmad; and other economic and financial experts. Sanusi, who did not give the full details of the policy, said the move was imperative in order to protect investors from losing their money to exchange rate fluctuation.
According to him, “The primary responsibility of the CBN is price stability; we don’t really provide growth but we provide the environment where investors feel safe to invest.
“We want investors to know that they are not going to lose their money to exchange rate fluctuations. As a regulator, we are focussing on this and we have made a lot of progress in terms of interest rate in Nigeria.
“Interest rates are now positive in real terms but there is still concern about the exchange rate and I believe that in the next two weeks, people will begin to see what will be the stance for the next 12 months. We will come and say what the stance is.”
He continued: “I think recently we had a situation where all the major currencies were hit and the naira lost three, four or five per cent and the whole world is screaming.
“We did have a band and never said we have a fixed rate. What we said was that we were going to have a stable rate, and I don’t care if it’s N155 or N156 to the dollar because that’s not important but the investor who changes naira into dollar to invest at 15 per cent and lost three per cent wants to know that in three months the naira wouldn’t have lost up to 15 per cent. Nobody wants to have all the gains in fixed income or equities wiped out by exchange rate bubbles.
“So what we have tried to do at the central bank is to provide people with expectations and, so long as we are not running reserves at an outrageous rate, we will try to get that stability.
“We think we might move to N155, N156 and people know that, over the next 12 months, they can expect the CBN to keep within that band.”
Also speaking at the event, Oteh said that the commission would help to diversify the economy by assisting in the structured financing of the country’s huge infrastructural development.
“We are building a more robust investor protection regime, a market that is fair, efficient and transparent. We are pursuing this goal by continually raising the standards of our regulatory environment, revitalizing our enforcement programmes, introducing new products, enhancing our processes with cutting-edge technology and investing in new strategies for investor education,” she said.