The naira, which has been under pressure in the last few weeks, on Monday crashed against the dollar to N173.20 at the interbank market, causing panic in the financial sector.
There are also indications that this has prompted the Central Bank of Nigeria to call all bank chief executive officers to a meeting in Abuja in a bid to save the naira from further crashing.
A top CBN official, who spoke under the condition of anonymity because he was not authorised to speak on the matter, said, “The CBN is trying to employ moral suasion now since efforts to prop up the naira in the last few weeks have not brought any result. The CBN is trying to meet the bank CEOs to persuade them to take measures and actions that will bring the naira up.
“The CBN believes that some banks are advising their customers that have major future obligations to bring them forward because they don’t know what the exchange rate will be in January. They want them to assure their customers that nothing will happen to the naira in the near future.”
Analysts believe that aside investors who have brought their obligation forward, the activities of speculators and foreign portfolio investors have combined to increase the demand for dollars at the interbank level.
“The activities of speculators as well as foreign portfolio investors are bringing up the naira. This is the time the CBN needs to come up and tell us the outlook for the currency. They also need to stop the 10k spread for sale to counterparties,” a forex dealer, who spoke under condition of anonymity, said.
The naira last traded above N173 mark in February this year when President Goodluck Jonathan suspended the former Governor of the CBN, Mallam Lamido Sanusi, analysts said.
It traded at N169 to the dollar on Friday. It however fell by about N4 on Monday, barely 24 hours after the Federal Government unveiled new austerity measures aimed at cushioning the effects of the falling oil prices on the economy.
Financial and money market analysts said the market was reacting to the new string of austerity measures unveiled by the Economic Management Team on Sunday.
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