The continued intervention of the Central Bank of Nigeria in the foreign exchange market to strengthen the naira is inevitable due to the volatile nature of the market, the President and Chairman of Council, Chartered Institute of Bankers of Nigeria, Prof. Segun Ajibola, has said.
According to him, the FX market requires “constant policing”, adding that the CBN interventions have brought some stability to the local unit.
Ajibola spoke during the 2017 Annual General Meeting of the institute in Lagos.
He said, “The foreign exchange market, as we know, in any part of the world, is a very sensitive market. It is a market that requires effective and constant policing. So, the intervention of the Central Bank of Nigeria is inevitable.
“What’s happening in the market usually is a question of the forces of demand and supply. So, with the intervention of the central bank, we’ve seen some improvement in the exchange rate as it affects the naira and dollar because FX supply has increased.”
Recent interventions in the forex market by the CBN have led to significant appreciation of the naira.
This has boosted investors’ confidence in the economy.
However, as the naira continues to gain momentum against United States, dollar, Ajibola expressed hope that the gain would be sustained.
This, according to the CIBN president, will be achieved as the Federal Government seeks to generate additional forex from non-oil exports sale of crude oil.
He said, “Sustainability is a function of the country’s ability to generate sustained increase in foreign exchange supply into the economy.
“We only pray that Nigeria as a country will continue to generate more foreign exchange either from the oil and gas or from non-oil export so that the intervention is sustainable and we continue to feel the positive impact of intervention by way of improved exchange rate for the naira. So, it is quite desirable, it has been helpful but then can it be sustained.”
Notwithstanding the economic challenges that characterised the past financial year, the CIBN president announced an increase in the financial performance of the institute.
According to him, the healthy financial position will enhance institute’s long-term financial independence.
The CIBN introduced some administrative restructuring to its operations during the AGM, which was well attended by its members.