Why the Naira Appreciated Against Other Currencies - CBN Explains

Hehe.....The reason for the sudden appreciation of the Nigerian naira against other currencies has been explained by the Central Bank of Nigeria.  The Central Bank of Nigeria said the recent appreciation of the Naira against other currencies was the result of its market monitoring and intervention. The acting Director, Corporate Communications of the CBN, Mr Isaac Okoroafor, on Thursday in Sokoto refuted the claim that the allegations by Mr Babatunde Gbadamosi on the illegal sales of foreign currencies at ridiculous rates were responsible for the change in forex policy. Gbadamosi, a Lagos businessman and former governorship candidate, made allegations of racketeering against the CBN and disparity in allocation of foreign exchange to cronies of the present administration. He further accused the CBN of selling dollars to some people for as low as N3 to a dollar. The CBN, however, released a statement clarifying that the transactions in question were third party transactions like Japanese Yen to the South African Rand or Euros to U.S Dollars. The CBN also directed banks to file returns on the sale of foreign currencies in dollars to avoid ambiguities and misinterpretations in future. Okoroafor said also that the appreciation of the Naira was in no way connected to the allegations of Gbadamosi. He said, “I want to state categorically that there is no relationship whatsoever between the allegations by the so-called person [Gbadamosi] that dollar was being sold at 61 kobo and the current appreciation of the Naira.“What led to the appreciation of the Naira includes the following:“The CBN has done its intelligence work on the market and we came to the realisation that much of what was driving the demand on the BDCs and the parallel market was speculation.“We reasoned that since there is a lot of pressure on the two segments from people seeking to buy foreign currencies for BTA, tuition and medical, that if we successfully address that, the pressure will come down.“Also, before now, the level of our reserves was not enough to make us comfortable to really do the kind of intervention that is required.“We decided to do so now because we are a bit more comfortable with our level of reserve.” Okoroafor said that since the new forex policy, the CBN had intervened with about $591m in the market which had led to Naira gaining strength. He said, “Let me also state as proof that when we placed $500 in the market only $370 was taken.“That tells you that the real demand is $370m. When we placed $230m in the market, only $221m was taken.“Anybody who has run afoul of the law, and the security agencies have caught up with him, should go and face his or her case and stop causing confusion amongst participants in the market.” -NAN