Forex intervention to converge rates, says Emefiele

The Central Bank of Nigeria (CBN) has explained  that the purpose of its current foreign exchange intervention is to bring about a convergence of all the rates.

The CBN said it has the strength to sustain its foreign exchange intervention to stop the Naira from falling out of control.

Addressing journalists at the end of the Monetary Policy Committee (MPC) meeting Abuja on Tuesday, the governor of CBN Mr Godwin Emefiele warned doubting Thomases that “they are taking a risk and they will lose in this bid to want to place the wrong bet on the direction we are going.”

“The direction is that there is determination to see the convergence of those rates and with what we have seen so far we are very optimistic that those rates will converge and all the elements in the foreign exchange market will no doubt be implemented.”

Emefiele noted that “in terms of sustainability, reserves at this time are still trending upwards almost close to $31 billion as I speak with you and the fact that we have done this consistently for four to five weeks should convince everybody who doubts the strength of CBN to sustain this policy.”

He stated that “it is a programme that is on course, we are happy that it is looking good beyond our expectations and those who still remain on the sidelines doubting the CBN’s ability to sustain this policy, they are on the wrong side of the bet.”

Speaking on what led the apex bank to initiate the intervention, Emefiele said the CBN made a presentation on the Nigerian economic and FX to the National Economic Council (NEC)  which thereafter advised that we look into all the issues discussed.

“Before then we had started to see the rising trend in the FX particularly in the parallel market and we had taken a decision that there was a need to reverse the trend that is the reason we specifically started the FX intervention and I am happy it is indeed very gratifying that those interventions have proved positive, we’ve seen rates converging we are strongly optimistic that the rates will converge.”

On the movement of rate from N305 to N307, Emefiele said the movement “has nothing to do with any adjustment, the market is not one to be fixed, the market will move sometimes based on trends it is not meant to be a fixed market it is sort of a floating market that floats within a particular range. It is not an attempt to further weaken the Naira.”