…deploys $11.7billion to agriculture
IN its bid at ensuring that the divergence between the official and parallel exchange rates for the naira against the dollar does not exceed N3, the Central Bank of Nigeria said it has put in place measures to stabilize the currency volatility in the parallel market.
The naira made a miraculous recovery last week, recovering from N400 a dollar in the parallel market to N330 in a week.
According to source, the CBN has the capacity to sustain the downward pressure and will deploy further currency management initiatives, while capitalising on fiscal policies of the federal government to remain in support of non-devaluation of the Naira.
“The current stand of the federal government on Nigeria’s legal tender is Non-Devaluation. It will be unwise for anybody to be hoarding dollars because we can assure you that naira appreciation is going to trend upwards going forward,” the source said.
So far, the CBN in a bid to manage the pressure on supply has deployed over $11.7billion to support Agricultural Sector, SMEs, manufacturers and others. This has reduced patronage of black market by end-users and has forced rent seekers to dump the greenback thereby creating a dollar-glut in the black-market.
The source noted that it has been observed that most of the imports that were draining forex resources have since found local substitutes with attendant savings in forex and shortage of demand for the greenback, which was fuelling the pressure, this is also coming on the heels of the CBN instruction to commercial banks to publish allocation of forex to end-users. This has in recent times ensured that the real sector of the economy and genuine users for education and medicals have been able to access Forex at official rate.
Industry analysts have also described the development as a game changer for majority of local manufacturers in Nigeria. The manufacturers acknowledged that the impact of CBN policy on forex since, its inception has more than doubled their productive capacity, with attendant benefits in terms of expansion to meet increasingly higher demands for their products and services.
The Analysts said, “Conveniently, since the CBN foreign exchange policy came into existence, production capacity by local manufacturers has increased from 50 per cent to 70 per cent. This has impacted on their propensity to increase exports with higher volumes which is expected to also earn Nigeria commensurate higher foreign exchange earnings.”