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Dollar crashes against Naira - As Senate confirms Sanusi as CBN gov From Odidison Omankhanlen and Taiwo Adisa Thursday, June 4, 2009 THE volatility in the nation’s foreign exchange (FOREX) market is beginning to settle as the nation’s currency, the Naira, has begun to appreciate massively against other world currencies at both the official and parallel markets. advertisement Findings by the Nigerian Tribune at both the Bureau de Change (BDC) and black market segments showed that the naira which was N180 to the United States dollar prior to the policy now exchanges for between N165 and N168 to the dollar. Same applies to the Pound Sterling, Euros, CFA, Yen, among others. Also, the official market being moderated by the CBN is experiencing relative stability as against some weeks ago. This is also coming amid assurances from the new governor of the Central Bank of Nigeria (CBN), Mr. Lamido Sanusi Lamido who said on Wednesday that the Naira would continue to strengthen and stabilise from its current rate. “It will continue to strengthen as it is clear there will be a convergence,” said Sanusi, at his Senate confirmation hearing on Wednesday. The Senate on Wednesday confirmed the former Group Managing Director of First Bank of Nigeria, Plc., as the Governor of the Central Bank of Nigeria (CBN). President Umaru Yar’Adua had nominated Sanusi as the new governor of CBN in a letter addressed to the President of the Senate, David Mark, on Tuesday. The senators decided to fast track the screening process by taking Sanusi in a Committee of the Whole, the treatment that was hitherto reserved for ministerial nominees. During the question and answer session, Sanusi expressed the desire to ensure a stronger Naira and a stable currency. “You can see that the Naira has now been strengthened. You see, people don’t really care if it is 150 or 170 or 180, but people want to know, and I think what is important is stability, people want to know that if you import a shipload of rice at N150 to a dollar, you want to be sure that by the time you sell your rice, and want to buy the next ship, it is not N250 to a dollar. “That is really what we want. It is about managing expectations and I think this is being done extremely well and the best thing is to continue along this line.” The new CBN Governor also told senators that the country’s dream of development could only be achieved through the provision of infrastructure. He said that the recent devaluation of the currency by the CBN was done at the right time, but that the currency had since commenced an upward swing, with the improvements in the international oil market. Sanusi also praised the efforts of his predecessor, Professor Chukwuma Soludo, whom he said laid a solid foundation for the economy. He also commended the former governor for stabilising the Nigerian economy and ensuring that the impact of the global financial meltdown did not rubbish the country’s fiscal environment. According to him, the former CBN governor took the decision to devalue the Naira at the right time, adding that the action was necessary to save the economy and ensure the nation’s foreign reserves. He stated: “There is need for a total reform and greater coordination. On the value of the Naira, I admit that the depreciation in the value of the naira under former CBN Governor Soludo at the time it happened was absolutely necessary. “There was no way, with oil prices where they were, with our foreign reserves at risk, there was no way a responsible CBN would continue subsiding imports. It also happened at a very good time because as the naira was losing its value, commodity prices were falling.” “What we need to do is open the interbank market, to improve the bank open position limits, to go back to wholesale debt auction, and to reverse the emergency measures that were taken, which were temporary, as quickly as possible.” However, analysts have differed on the sudden appreciation of the Naira. While some stated that the market was only reacting to the change of baton at the apex bank and anticipating the policy direction of the new governor, others attributed it to the recent decision of the CBN to return to the regime of fully liberalised foreign exchange (FOREX) market over the next three months. According to a stockbroker, Ignatius Ajeromi, what was happening at the FOREX market was the usual thing in developed parts of the world, stressing that traders are maintaining ‘wait and see’ attitude. He added that as soon as the new CBN governor makes policy statement on the market, there would be some noticeable changes, stating that the immediate past governor did well in handling the market. However, a financial analyst and Managing Partner, Trustfield Securities, Mr. Owolabi Ogunmola, opined that the forex market had been maintaining progressive appreciation since two weeks ago, stressing that the far-reaching decisions taken at the Monetary Policy Committee (MPC) were largely responsible for the gains in the market. It will be recalled that while addressing newsmen after the MPC meeting on May 21 in Abuja, the former CBN governor, Professor Chukwuma Soludo announced the return to Wholesale Dutch Auction System (WDAS) by increasing the net foreign exchange open position for banks from one per cent to 2.5 per cent with immediate effect, while keeping in view the possibility of raising it further at the end of June, 2009.