The governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has emphasized that there is no need for panic over the recent depreciation of the naira against the dollar, and has reassured investors that the central bank will continue to meet legitimate foreign exchange demand.
Emefiele, who said this at the Nigerian Stock Exchange (NSE) yesterday, where he also rang the closing bell, insisted that the nation’s currency was “appropriately priced”.
However, the naira defied the CBN governor’s statement, as it slipped further to close at N206/$1 on Thursday in the interbank market, as against N205.90/$1 from the previous day.
Also, market capitalisation at the stock market dipped for the fourth consecutive trading session, closing at N9.321 trillion yesterday, representing losses of N475 billion in four days, compared to the N9.796 trillion on Monday.
But Emefiele maintained that all over the world, economies including Nigeria were contending with the drop in commodity market especially oil prices. In his words, “The price of crude oil dropped from $115 per barrel to below $50 per barrel which has affected activities on the Nigerian capital market.”
He explained that this had led to the All-Share Index’s decline by 28 basis points, adding that the country’s gross domestic product (GDP) might also drop.
He however said the central bank was doing everything within its power to ensure price stability.
He added that the economy would survive the (postponed) elections, as it had done in past elections, assuring investors that the coming elections would be conducted peacefully.
He urged foreign investors to retain confidence in the Nigerian economy and capital market as the country would not disintegrate.
The CBN governor explained: “We are not in the best of times but there’s no need to panic. The Nigerian monetary authorities as well as fiscal authorities are doing everything they can to respond to these vulnerabilities.
“I repeat that there is no need for us to panic because we’ve looked at various scenarios and models where we looked at some of those actions that the monetary and fiscal authorities would kick in as we attain various levels in the price of crude.
“I think it is important for me to at least commend the fiscal authorities. In 2014, for instance, as these unfolding events started, the Minister of Finance invited the McKenzie group to look at our non-oil sources of revenue.
“In 2014, we had an over N75 billion increase in non-oil revenues. We are expecting that in 2015 this will ramp up to as high as $1 billion. Those are some of the activities that have been put in place. There is no need to panic.”
Emefiele added: “We’ve seen people also responding as a result of the political situation in Nigeria and all I can say is that the Nigerian economy remains resilient… And that is why I say there is no need to panic.
“The elections will take place. I am not supposed to respond to (questions on) elections, but it is important for me to say there is no need to panic as a result of the elections.
“The elections will happen, they will go, Nigeria will remain the same and economic activities will improve. That is a statement I thought I should make, not only to Nigerians but also to our foreign investors and partners who are working with us. Retain your confidence in Nigeria.”
The president of the NSE, Aigboje Aig-Imoukhuede, corroborated the views of the CBN governor and called on retail and institutional investors to invest in the capital market and the economy at large, saying: “There is a great fortune to be made in the Nigerian economy.”
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