According to the apex bank, the idea not to devalue the Naira was borne out of the need to safeguard the Nigerian economy from the shocks and negative impact the depreciation will have on the economy.
In a statement signed by its Director, Corporate Communications, Mr. Ibrahim Mu’azu, the apex bank stated that it will not panic and take desperate measures to satisfy few misguided interests in the market.
Mu’azu, who was reacting to an article in the Economist Magazine, said the article seemed to ignore the fact that the exchange rate is simply a price that is essentially determined by the forces of supply and demand, adding that the CBN believes that the 48 per cent decline in oil prices may not be transitory and made bold policy changes including closure of the subsidized Official Foreign Exchange (Forex) Window, which resulted in a 22 per cent depreciation in the currency, the Naira.
“Because the Nigerian economy is heavily dependent on imports and the exchange rate pass-through to inflation is high, we believe that this adjustment is optimal at this time.
“Contrary to the article’s argument, adjustments to a sharp decline in supply of US Dollars cannot all be borne by an indeterminate depreciation, without considering the full impact on the Nigerian economy.
“The demand side also has to be considered, not just in response to the pressure on the Naira but as an opportunity to change the economy’s structure, resuscitate local manufacturing, and expand job creation for our citizens.
“Take rice imports, for example: why should we keep allocating scarce forex to rice importers when vast amounts of paddy rice of comparable quality produced by poor hardworking local farmers across the rice belts of Nigeria are wasted, and farmers are falling deeper into poverty while we export their jobs and income to rice producing countries?” The statement read,