Revealed! CBN sends warning to currency dealers as naira falls again

• CBN said there will be repercussions for authorized dealers who abuse the foreign exchange (FX) system
• The CBN governor pledged that the bank would implement measures to promote market efficiency
• He warned that traders who were abusing the FX system would be subject to more severe sanctions from the regulator

Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.

Authorized dealers who take advantage of the foreign exchange (FX) system will face consequences, according to Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN).

The CBN governor stated that the strategies put in place are progressively restoring trust in the naira. Photo Credit: CBN
Source: UGC

Cardoso promised that the bank would put policies in place that support market efficiency during his remarks at the Nigeria Development Update (NDU) report launch in Abuja on Thursday.

He issued a warning, saying that traders found to be misusing the FX system would face harsher penalties from the regulator, The Cable reported.

“The Central Bank does not determine the exchange rate. Exchange rates are determined by fundamentals,” Cardoso said.“The Central Bank will work around the various policies that we bring out to ensure that the market functions efficiently, effectively, that nobody comes in to take advantage of the system and if they do, especially with respect to the authorised dealers, they will be sanctioned accordingly.“That sanction, I can assure you, is getting tougher and tougher by the day. So it is making it less and less interesting for anybody who wants to go there and take advantage of our system.”

CBN policies to help naira

Additionally, Cardoso stated that the strategies put in place are progressively restoring trust in the naira.

Higher interest rates and stricter monetary policies are essential to preserving the value of the currency, the CBN governor said, underscoring the need of having faith in the naira.

“People cannot keep holding on to local currency if they believe that their money will not maintain its value and for us, it is important to build that trust,” he said.“You cannot expect anybody to have confidence in your currency if they do not trust you.”

According to him, the bank is doing everything it can to stay true to its policies while remaining modest enough to deal with problems when they arise.

In order to foster and enhance public trust, Cardoso says the bank is also committed to continuously conveying a clear and transparent message in its activities.

Naira nears N2,000/$ in black market

Legit.ng reported that despite the various reforms of the Central Bank of Nigeria (CBN) to prevent the naira from plummeting further, the Nigerian currency continues to sink lower in all foreign exchange markets.

Analysts have stated that the apex bank's irregular interventions in the FX markets are to blame for the naira’s woes.

On Thursday, October 17, 2024, the local currency sank further in the official window to trade at N1,660.49 per dollar as against N1,659 it traded on Wednesday, October 16, 2024.

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Source: Legit.ng