Central Bank of Nigeria (CBN)’s governor, Godwin Emefiele, weekend said the factors causing the continued fall in the value of the naira are beyond the control of the CBN and the Federal Government.
He said these reasons lead to the apex bank’s devaluation of the naira a couple of weeks ago, instead of continuing to defend the nation’s currency from the external reserves.
“The CBN took the decision that it would be sub-optimal to continue to heavily deplete the country’s reserves in defending the naira. This decision was appropriate because neither the central bank nor the federal government is in control of the major factors causing the depreciation of the nation’s currency.
“In fact, the Russian central bank has abandoned its defence of the currency and allowed the depreciation of the currency, but only after it was said to have spent over $90 billion in defending the currency over a couple of months.”
Although the decision to devalue the national currency would come with pains, it would lead to benefits in the long run, he added.
The factors which he said were beyond the CBN and the government included the fall in the global oil prices, the end of the United States Quantitative Easing programme and the global fall in the price of other export commodities apart from the crude oil.
Moreover, he said the discovery of shale oil by the US had not also helped matters.
All these, Emefiele observed, had constituted low supply of the US dollars amid high demand for them.