CBN explains reason for decline in value of Naira

A senior official of the Central bank of Nigeria (CBN) on Monday in Abuja, blamed the devaluation of the naira on the effects of COVID-19 pandemic on the economy.
The Deputy Governor, Corporate Service Department of the apex bank, Mr Edward Adamu, made the revelation at the 2022-2024 Medium-Term Expenditure Framework/Fiscal Strategy Paper (MTEF/FSP) committee interactive session with Ministries, Departments and Agencies (MDAs).
According to Adamu, the exchange rate itself is determined by the forces of demand and supply and that there are three main avenues by which Nigeria gets foreign exchange.
“We have proceeds from sale of crude oil, we have foreign portfolio inflows and remittances; those are the three major ways that we get forex.
“Crude oil sale has not been as high as we all want it to be and obviously in the aftermath of COVID-19, the global economy grounded to a halt and the use of crude oil also was halt.
“To the extent that sometimes in April last year, we had crude oil selling at a negative money which means that, people were being paid to store what they bought and so that avenue for forex inflows was significantly reduced.
“You go on to foreign portfolio inflows, you notice that investors also settle their affairs on the side of caution and so once COVID-19 outbreak occurred, they moved out about 120 billion dollars from emerging market to the safe haven in America and Nigeria is one of those countries the monies was withdrawn from.
“On the remittances side, once our brothers and sisters abroad were not working because of the situation they found themselves; they had very little to send to us here and so we also saw remittances reduced.
“On the demand side, we saw speculative demand on the sides of Nigerians, if you needed a truck of goods, because you are not sure of the uncertainties of COVID, you wanted to get three trucks.
“All these pressures on both the demand and supply side, the availability of dollar became more difficult and we had decline or depreciation in the value of the naira,’’ he said.
The CBN official, however, said that a lot of efforts within the CBN and the recovering global economy were helping oil price and remittances recover.
According to him, this is why we are happy that the exchange rate has stabilised somewhat; it is a moving target but it has stabilised in the import and export window for a while.
However, the Chairman of the committee, Rep. James Faleke (APC-Lagos) directed the CBN to present its audited account to the Office of the Accountant General of the Federation (OAGF) for scrutiny.
Faleke said that information available to the committee showed that the apex bank was yet to turn in its audited account since 2010 and about N800 billion was yet to be remitted to the Federal Government.
Adamu howver, responded that the apex bank would interface with the OAGF and reconcile any difference there was and report to the committee in two weeks through the Minister of Finance.