Rising naira value: Presidency backs Cardoso, vows further clampdown on racketeers

The President Bola Tinubu's "multi-faceted approach to ridding the nation's foreign exchange market of malign actors and sharp practices" is in line with the coordinated efforts of the Yemi Cardoso-led Central Bank of Nigeria to stabilise the naira, according to a statement released by the Presidency on Tuesday.

In addition, it promised to keep up the fight against racketeers and urged Nigerians to brace themselves for a major decline in the cost of necessities by the first quarter of 2025 due to a stronger currency.

Speaking in light of the recent actions taken by the central bank to stop the naira's wild slide and restore the local currency to its fair value, Ajuri Ngelale, Special Advisor to the President on Media and Publicity, made these remarks.

Following the issuance of multiple circulars and orders by the CBN, the value of the local currency increased, rising from 1,900/dollar in late February to about 1,200/dollar on Tuesday at the parallel market.

On Monday, the naira strengthened to roughly 1,230/dollar from nearly 1,500/dollar at the official market, where it had dropped against the US dollar.

Analysts claim that the CBN's recent measures have been crucial in the naira's rise versus the dollar.

The adoption of a Price Verification System, the removal of the daily cap of N2 billion on remunerable Standing Deposit Facility, the liberalisation of the FX market, the unification of exchange rate windows, the clearing of banks' and airlines' FX backlog obligations, the imposition of limits on banks' Net Open Position, and overhaul of the Bureau De Change segment.
Currency speculators and racketeers in the FX market as well as the banking industry have suffered as a result of several market reforms.

On Tuesday, however, the President pledged to maintain the momentum, stating that regulatory bodies will target racketeers and "malign actors" who are determined to thwart government initiatives.

In addition to fixing the currency rate, the President promised to combat inflation and bring it down to a meaningful level.

President Tinubu "has been very consistent in his view that the labour pains felt by our people and the incredible sacrifices made by our people over the past 10 months would be rewarded across the board," according to Ajuri Ngelale, Special Advisor to the President on Media and Publicity.

Thus, he stated, "We are witnessing a sustainable strengthening of our national currency against all global currencies as a result of the President's multifaceted approach to clearing the nation's foreign exchange market of malicious actors and sharp practices."

However, there is still a lot of work to be done, so now is not the time to celebrate. It's time to step up efforts to ensure that inflation is quickly and sustainably brought down, and that consumer protection regulatory bodies increase their enforcement to make sure that businesses that fail to account for current exchange rates in their pricing of goods and services don't shortchange our people," the speaker continued.

The Presidency also conveyed confidence that the anticipated restart of operations by both government-owned and commercial crude oil refineries will improve the nation's economy and generate more money.
Ten months ago, Tinubu took office and immediately stopped providing petrol subsidies, claiming that this would free up government funds for infrastructure development.

Presidency gives Nigerians comfort

In order to prevent currency arbitrage, among other things, he also harmonised the foreign exchange rates.

But these actions caused unintended instability in the naira's value, which made life difficult for Nigerians as food prices skyrocketed.

The President declared on the day of the inauguration that "subsidy is gone!" set off a chain reaction of petrol shortages while petrol prices skyrocketed in a matter of hours.

The Nigerian National Petroleum Company Limited stated that the modified pump price was in line with "current market realities" in a statement released on May 31 and signed by Garba Deen Muhammad, who was the company's then-chief corporate communications officer.

The expense of living reached an all-time high as a result of the higher pump price, which also caused the prices of necessities to skyrocket.

As a result, the government and Organised Labour have been at odds for months over what the latter group claimed to be the government's inability to ease the suffering of the populace. Labour further contended that, given the skyrocketing cost of living, the N30,000 minimum salary was no longer sustainable.

The Nigeria Labour Congress and the Trade Union Congress of Nigeria called for nationwide protests and sporadic strikes, so on January 30, the Federal Government established a 37-member minimum wage committee to draft a new national minimum wage for the nation.

More specifically, the naira's floating in the Investors & Exporters FX market made the cost of living situation worse. The value of the local currency fell to an all-time low in February 2024, around N1,900/$. Around N800/$ was exchanged for it at the beginning of the administration.

Nonetheless, the naira has been steadily rising versus the US currency recently, trading at N1,200/$.

Furthermore, the CBN started selling foreign exchange (FX) to BDC operators at a discount in an attempt to close the growing exchange rate difference and correct anomalies in the retail sector of Nigeria's FX market.

The apex bank instructed the BDCs to sell to qualified customers at a rate not to exceed 1.5% above the purchase price (N1,269/$1) after selling $10,000 to them in March at a rate of N1,251/$.

It sold $10,000 at N1101/$ to each BDC in April and instructed the operators to sell at a spread of no more than 1.5% over the CBN rate.
Additionally, starting on April 8, 2024, the CBN instructed all qualified BDCs to deposit naira into the assigned CBN accounts.

Investigating organisations whose acts it feels are impeding the Tinubu administration's attempts at economic reform is another aspect of the CBN's efforts.

Cardoso disclosed in late March that security authorities, such as the Economic and Financial Crimes Commission, were looking into dubious forward contracts and foreign exchange allocations that were previously valued at $2.4 billion.

A multinational company called Deloitte was hired by the new CBN administration to conduct an audit of the $7 billion in loans. About $2.4 billion in FX allocations from the $7 billion backlog were previously declared to be erroneous by Cardoso.

This came about as a result of the detention and ongoing investigation of two executives of the international cryptocurrency trading platform Binance for possible tax fraud and other offences.

The CBN ordered all Nigerian banks to cease using foreign currencies as security for naira loans on April 8, 2024, and to do so within ninety days. This was revealed in a circular with reference number BSD/DIR/PUB/LAB/017/004 that was headlined "The use of foreign-currency-denominated collaterals for naira loans."

The regulator stated that it has seen bank customers using FCY as collateral for naira loans and, as a result, it forbids this practice effective immediately.

As a result, it instructed banks to reduce all current loans with foreign currency collateral to 90 days or face a computation of 150 percent for the capital adequacy ratio as part of the bank's risk.
The Presidency asserted that although these initiatives have yielded some success, it is not yet Uhuru until the cost of necessities for the typical Nigerian has decreased.

The Presidency instructed consumer protection organisations to make sure that local prices accurately reflect the naira's increasing worth.

However, there is still a lot of work to be done, so now is not the time to celebrate. Now is the moment to step up efforts and make more of an effort to guarantee that inflation is quickly and sustainably reduced.

"The country's cash position will significantly improve as our privately and publicly-owned refineries start operations between now and the first quarter of 2025, so Nigerians should legitimately expect a stronger Naira and a fair reflection of its strength in the prices of commodities in the market place,” said Ngelale.
Additionally, the Presidency gave Nigerians hope for better times to come, stating that as the administration develops, the advantages of the changes will become "more evident."

"Even as the signs are increasingly more evident today, Nigerians will be most pleased that they elected a financial engineer and businessman as president by the end of his first term in office, once you join the rising spending power of Africa's largest population with the historic availability of trillions of naira for consumer credit that will bolster the real sector," the Presidential Spokesman concluded.

Naira reaches N1,200.

According to Bureau De Change operators, the naira strengthened to N1,200/dollar on Tuesday in the parallel segment of the foreign currency market.

The graph shows a rise of N40 from the N1,240/dollar reported on April 3.
In the well-known Wuse Zone 4, both licenced and unlicensed bureau de change operators stated that the purchase rate of local currency was between N1,100 and N1,150, while the selling rate was between N1,150 and N1200.

Malam Yahu, a currency dealer, stated