Yemisi Izuora
The Governor, Central Bank of Nigeria, Mr. Godwin Emefiele has said that speculative activities embarked upon by banks is a major cause of artificial dollar demand.
The apex bank he warned will not hesitate to withdraw the foreign exchange dealing licences of banks that engaged in speculative demand for the dollar at the forex market.
The governor during an interactive session organised by the Nigerian Economic Summit Group in Lagos, insisted that speculative activities is responsible for artificial demand of the dollar and thus causing unnecessary pressure on the naira.
“We will not hesitate to suspend the dealing licences of banks speculating on the dollar. Companies caught involved in sharp practices under the guise of seeking dollars to import items into the country will lose their licences,” he said.
Emefiele, who described currency speculative activities as sharp practices, said the CBN would not shy away from dealing with the unpatriotic behaviour because they could make the nation to “plunder its external reserves and throw the country into crisis.”
According to him, frontloading demand for forex and other speculative activities have made the CBN to come up with certain measures aimed at stabilising the forex markets.
He listed the measures to include the review of banks’ foreign currency net open position, weekly forex sales to Bureau de Change operators, and increased scrutiny of items to be imported with the forex purchased from the banks.
Emefiele, however, said the ultimate way to end speculative demand for the currency was for the country to start producing what it had been importing.
As a result, he said the CBN planned to stop the sale of forex to importers of rice and other commodities in the future.
The CBN governor said, “The more we import, the more we deplete our reserves. As times goes on, we will not allocate forex to companies importing rice. We import virtually everything into this country. We import toothpicks, toothpastes, petroleum products and all manner of things. Should we be importing everything?”
He said the central bank would meet legitimate demands for forex but would not be concerned about illegitimate demands.
He also said the CBN would continue to monitor the market and provide forex liquidity as might be required.
Emefiele added, “The demand pressure needs to stop. Let me tell you that people engaging in speculative activities will lose money. There is no need to import beyond your capacity. Do your business in an orderly manner.
“The $34bn in the external reserves can support this economy. There is no need to panic or worry. The CBN has shown readiness to support the exchange rate.”
The governor gave an assurance that this year would be better because the CBN had plans to ensure that all macroeconomic indicators remained within target limits.
The Chairman, Dangote Group, Alhaji Aliko Dangote, who was also at the conference, said the nation needed not to be importing virtually everything.
He advised the business community to support the government and the country by seeking to export commodities rather than import perpetually.
“We need to set a foundation for the country’s revenue base. We need to become an exporting country after which we can then allow the naira to float without supporting it,” Dangote said.
He noted that his companies had invested in several projects that would make it to become the highest forex seller by 2018.
A former Chairman of Diamond Bank Plc, Mr. Pascal Dozie, said the current challenges in the economy presented the best time for wise investors.
He, however, advised the government on the need to restructure the economy, while urging the CBN to encourage fiscal authorities to ensure that the economy was diversified.
“If there is no corresponding action from the fiscal authorities, the CBN will continue to be under pressure,” he added