Leadership (Abuja)
26 December 2008
In the last one month, the naira has depreciated in the official market from N116.50 to N134 per dollar.
At the parallel market, the Nigerian currency had sailed perilously close to N140 to the dollar. The Central Bank of Nigeria (CBN) first confronted the crisis by blaming speculators for the depreciation and then threatening to make them "'pay dearly".
However, CBN governor Professor Chukwuma Soludo last week admitted, rather belatedly, that the apex bank had deliberately allowed the naira to find its level because it lacked the foreign exchange to sustain the former rate. The free fall of the naira engendered by dwindling inflow of foreign exchange due to tumbling oil prices has returned us to the days of massive capital flight and speculative bidding by banks. With declining forex inflow and rapacious demand, it is doubtful that the CBN can make speculators "pay dearly" as it earlier threatened. That threat could be carried out only by flooding the market with dollars and driving down the exchange rate. The CBN has to police the market adequately and ensure that every cent obtained is spent lawfully.
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