The Central Bank of Nigeria (CBN) dismissed rumors of naira devaluation and affirmed its dedication to achieving gradual rate convergence.
Dr. Kingsley Obiora, the Deputy Governor in charge of Economic Policy, reiterated this stance during the Fiscal Liquidity Assessment Committee (FALC) retreat held in Abuja yesterday.
While the Import and Export window has made adjustments to rates, the CBN has not officially altered the rates. A recent report claimed that the apex bank devalued the local currency to N631/$.
However, Dr. Isa AbdulMumin, the Acting Director of Corporate Communications, refuted the report, labeling it as false. He clarified that the Investors and Exporters (I&E) window recorded a trading rate of N465/$ the previous morning. Dr. AbdulMumin affirmed the CBN’s commitment to gradually converging rates around the I&E window.
Financial analyst Paul Alaje warned that if the naira is indeed devalued, Nigerians should anticipate inflation rates ranging from 34 to 38 percent within the next two to three months. Alaje predicted that devaluation could occur within days and highlighted potential benefits such as increased foreign portfolio investment, foreign direct investment in dollars, and higher diaspora remittances.
He further suggested that companies would be more likely to bring in export proceeds in dollars, instead of diverting funds to foreign accounts or purchasing equipment for resale.
In the meantime, Aliyu Ahmed, the Permanent Secretary of the Federal Ministry of Finance, Budget, and National Planning, emphasized the need to bolster non-oil revenue through initiatives by the Federal Inland Revenue Service (FIRS) and Nigeria Customs Service (NCS).
Ahmed stressed the insufficiency of current revenues to support sustainable and inclusive development despite previous tax and revenue generation reforms.
Dr. Hassan Mahmud, Director of the Monetary Policy Department at the CBN, announced that the bank would continue implementing various quasi-fiscal measures to assist the Federal Government in managing the economy and addressing liquidity challenges amid global uncertainties. Mahmud highlighted the government’s substantial budget allocations aimed at stimulating economic activity and providing social safety nets, resulting in increased public debt and service costs.
Furthermore, the widespread adoption of electronic payment methods has impacted the CBN’s monetary policy management efforts to ensure price and financial system stability.
Given these circumstances, Mahmud emphasized the necessity of comprehensive fiscal consolidation efforts to enhance revenue mobilization and improve the efficiency of public expenditures. He also stressed the importance of intensified collaboration between fiscal and monetary authorities to ensure the achievement of macroeconomic objectives under the current conditions.