Emefiele Warns Speculators Against Creating Panic Over Naira, Forex

The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has warned against panic creation in Nigeria's foreign exchange (Forex) market. There have been speculation of a weak naira due to the rise in exchange rate in the black market.

Emefiele said the parallel market is not the basis of determining the value of the naira. Emefiele has often criticised the use of the black market as the determinant of naira's strength, stating that only illegal businesses patronise the parallel market.

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The naira has been trading between NGN476/483 to $1, but as at 5:00 pm today, November 24, 2020, one dollar traded at NGN483. While bank rate is around NGN390/419 to $1. Meanwhile, Nigeria Autonomous Foreign Exchange Market (NAFEX) opened trading at NGN385.96 to $1, but closed at NGN 385.50.

Use NAFEX To Determine Forex

The rising rate in the black market had led to speculation that naira is becoming weaker as high inflation and recession grip the country. In a Tweet by the CBN, seen by AllNews, Emefiele was said to have informed the market to use NAFEX window.

NAFEX is the FMDQ reference rate for foreign exchange activities in the Investors’ & Exporters’ FX market. There are three forex market in Nigeria, NAFEX, Bank rate and that of the parallel market - this is why Nigeria has a multiple exchange rates.

With the difference in rates, Emefiele said Nigerians should avoid creating panic, "The foreign exchange rate in Nigeria is determined by the forces of supply and demand in the Nigeria Autonomous Foreign Exchange Market (NAFEX) window."

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"CBN Governor, Emefiele, insists that the parallel market should not be the basis for determining the value of the Naira." The tweet reads.

Emefiele Addresses Inflation, Recession

Meanwhile, Emefiele said CBN will attack inflation from the supply side through low interest rates, while Bank will continue to stimulate the economy to ensure growth. He also said Nigeria's recession will end in 2021.

"Emefiele expresses cautious optimism that Nigeria will exit recession in Q1 of 2021 based on effort made by CBN and the fiscal authorities to create jobs and stimulate growth." CBN disclosed, adding that Nigeria needs to diversify its economy to grow its foreign revenue base.