The Central Bank of Nigeria (CBN) has debunked the reports, mostly by online media, that it had stopped the sale of dollars for payment of foreign school fees.
The apex bank, however, explained that it would henceforth prioritise sales to sectors that are more productive in generating employment and adding value to the Nigerian economy.
Banks’ managing directors last Friday revealed that payment of foreign school fees alone gulped 15 per cent of the total foreign exchange supply, far more than the amount that goes to the importation of raw materials.
A source at the Central Bank said some of the journalists who covered the Bankers’ Committee Meeting last Friday had misconstrued what the banks’ chiefs had said to mean a stoppage of the sale of foreign exchange for the payment of school fees.
He assured that the apex bank had no immediate intention of banning the sale of foreign exchange to those schooling abroad, but stressed that the top priority was to ensure that forex went to those that would add value to the local economy.
Frivolous demand for foreign exchange had depleted the naira’s value to new lows.
The external reserves continued to decline, reaching almost a 12-year low as it crossed the $29 billion mark to a 30-day moving average of $28.931 billion as at Friday January 7, 2016. This brings the total decline of the reserves from the beginning of December 2015 to 3.17 per cent.
The reserves which was at $29.880 billion as at December 1, 2015 had dropped by 2.7 per cent within the month to $29.069 the last day of last year before a further shed of $138.668 million between December 31, 2015 and January 7, 2016.
Having hovered around $30 billion since September, last year, the reserves began a steady decline in December, coming down to $29 billion which it maintained throughout the month before it hit $28 on January 4, 2016 – the latest figure given by the CBN.
The external reserves had depreciated by 14.1 per cent last year, having fallen from $34.46 billion by December 31, 2014 to $29.069 billion by December 31, 2015, according to figures given by the CBN on its website, covering barely four months of imports.
A CBN source explained that the decline was due to the fact that the level of inflow accrued into the reserves was slower than the level of outflow during the 30-day period.
Chief executive of Cowry Assets Johnson Chukwu, explained that the drop in the foreign reserves may not be unconnected with the negotiation of letters of credit established for the importation of PMS, which were funded from the N413 billion allocated to the payment of petrol subsidy in the recently approved supplementary budget.
Chukwu noted that “if the reserves falls below a certain threshold, the country may not be able to meet its foreign currency obligations. This could trigger loss of confidence by the country’s trade partners who may insist on cash collateral/cover before establishing letters of credit for Nigeria’s importers.”
Because of the pressure from so many frivolous buyers of dollars, the exchange rate of the dollar to naira crashed to N320 to the dollar at the weekend. Analysts say the sustained pressure in the exchange market is to blackmail the central bank towards rescinding its position not to devalue the naira.
Also toeing Nigeria’s line of reasoning, China’s central bank chief has blamed foreign speculators in part for volatility in the yuan and said there is no basis for further depreciation, according to an interview in Caixin magazine.
The Chinese economy grew 6.9 per cent in 2015 — the slowest rate since 1990 — and capital has been flowing out of the country due to worries over flagging growth, causing the currency to weaken.
“International speculative forces have recently focused on shorting China,” People’s Bank of China Governor Zhou Xiaochuan said, according to a transcript of the interview posted on the bank’s website Saturday.
“They are eager to manufacture public opinion to try to force an outcome as soon as possible,” he said, but did not identify those involved.
-Leadership