CBN’s Defensive War of Attrition on Behalf of Beleaguered Naira  

There are palpable fears that the Central Bank of Nigeria (CBN)’s effort at defending the naira may ultimately be in vain.
Opeyemi Agbaje of RTC Advisory Services Limited in his Business and Economic Review expressed fears that the weight of sustained foreign currency demand may eventually overwhelm the central bank’s enthusiasm to defend the value of the naira.
Agbaje is also not sure what the apex bank will do to hedge against the fiscal pressures as the 2015 election season draws nearer and make current CBN posture unsustainable.
He said the wisdom of trading off reserves to subsidies the exportation of capital by politically-exposed persons, sundry currency speculators and conspicuous consumption remains debatable.
“The CBN’s naira battle may be based on good intentions, but what was that saying about the road that lead hell being paved with lot of fantastic intentions! Prudent foreign exchange market players will probably begin to assume an exchange rate around N156-N170”, said Agbaje.
Meanwhile, the apex bank in its battle has announced the suspension of the Wholesale Dutch Auction System (WDAS) and re-introduced the retail equivalent, banned importation of cash dollars, except with prior approval in the wake of Nigeria attaining the dubious distinction of overtaking Russia as the largest importer of dollars.

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