The Central Bank of Nigeria issued a stunning circular on Wednesday indicating that it had closed down the Retail Dutch Auction Market rDAS and will now sell dollars directly at the interbank. Dealers also confirmed that it will be selling dollars at N198 an additional N30 from the N168 that it had pegged the naira at when it last devalued back in November 2013 following its MPC Meeting. The man at the center of this all is the CBN Governor Godwin Emefiele. The naira has been under pressure as we faced a dual wave of pressure from the slide in the price of oil as well as the impending 2015 general elections. Both on going developments has put pressure on the naira and the apex bank, warranting a spate of circulars all in a bid to stall speculation.
The question on everyone’s mind now is has all these circulars stopped speculation? Has it halted the continuous slide in the naira? Are they working? Should the National Assembly summon him? Could it even be that the CBN is making things even worse? These questions make you wonder if the man at the center of it all can be trusted to save the naira from this continuous slide. How does one rely on the words of a CBN Governor who continues to assure the market that the “naira is rightly priced” and that we need not “panic” only for it to come from the back door to devalue the naira and essentially allow it float. Float? Yes float because by shutting down the rDAS and relying on the interbank, the CBN is now basically a player in the forex market. It surely will not sell dollars at its preferred band of N168 +or- 5%.
Godwin Emefiele has met with the organized private sector, the stock market and has addressed the foreign and local media assuring them that the Nigerian economy was still strong. He has dropped net open position to zero, increased it again, stop banks from two way quotes, tighten CRR, restricted banks from more dollar borrowing, sold dollars directly to BDC’s, introduced timeline for utilization of forex by end users etc. Despite this, nothing seems to be working as the demand for dollar continues to rise suggesting that foreign investors are taking money out of this economy in droves. No one seems to be believing this Governor.
It’s pathetic how things have deteriorated this much and one wonders if nothing else could have been done to control the situation. How many innocent small businesses have now being ruined by all of this? How do small businesses who rely on imports plan? What about ordinary Nigerians who travel for business or personal reasons? How do they cope with all of this? What else can the CBN do to salvage this situation? Can they be trusted to help our economy navigate through this very tough times? These are all questions that must be asked with the most important of all being, Can Emefiele Save the Naira?