Banks endorse further naira devaluation

Speaking on the topic, The Nigerian banking environment in a low oil price, Mr. Onasanya advocated that the Central Bank of Nigeria (CBN) should allow market forces determine the true value of the naira.

He argued that the present artificial rate at which the nation’s currency is trading is unsustainable, adding that the current scarcity of forex in the country is a signal that the country’s economy is contracting.

“Manufacturing companies cannot fund importation of their raw materials. Even Nigerian banks are shopping for forex from the international market. Everything is at standstill.

“We can’t support the naira at N200/$1. There is need for slight adjustment of the naira. There is no need to panic, because Nigeria is not the only country adjusting her currency,” the FBN boss stated.

He claimed that if the country fails to allow the naira find its true value, the consequences may be very grave.

 In the same vein, the Group Managing Director, Zenith Bank, Mr. Peter Amangbo urged the CBN to allow market forces prevail in the country’s forex market, stressing the need for the apex bank to open up the market.

He noted that the market should be allowed to determine the degree of the devaluation of the naira, saying the country lacks the resources to continue to defend the naira.

“There are too many things to balance, salary backlog is there on one hand and stabilizing the naira on the other,” he said. The Zenith boss added that there is panic in the entire system and everybody wants to buy forex.

He expressed optimism that the present situation is redeemable, adding that the decision of the CBN to deny importers of goods that have local substitutes access to forex from the interbank market is laudable. He explained that this would make it expensive to import these items and promote local production as well as reduce the pressure on the naira.

 According to him, he foresees the reversal of some of the measures that the apex bamk has put in place to strengthen the naira very soon as the country’s economy improves. Mr. Amangbo encouraged Nigerians to be ready for a trade-off with the government if they hope to see the nation’s economy pick up again.

“The government have to remove constrains that are inhibiting economic growth and make it to be private sector driven,” he advised. Executive Director, Treasury, United Bank for Africa (UBA), Mr. Femi Olaloku, supported the arguments of the bank chief executives advocating for the devaluation of the naira. He reasoned that the devaluation of the naira is an approach we need to take as a people.

 He stressed that the CBN monetary policies aimed at strengthening the country’s currency must be backed up with appropriate fiscal policies.

“If there is natural adjustment of the naira, many people will be willing to participate in the forex market. It will not be only the CBN that will be supplying forex,” he asserted.

Meanwhile, major players in the Nigerian oil and gas sector have reiterated the need to reduce the cost of the production of the country’s crude oil.

The CEO, Seplat Petroleum Development Company Plc, Mr. Austin Avuru said the price of crude oil in the international market is presently determined by the cost of production, which is making the country crude uncompetitive in the global market.

“If we can’t bring down the cost of production, we won’t be able to play the game the big producers of Organisation Petroleum Exporting Countries (OPEC) are playing,” he opined.

The Chairman/Managing Director, Mobil Oil Plc, Adetunji Oyebanji noted that the country failed to manage its refineries properly as demand increased.

“Today, even if the refineries are working at 100 per cent capacity, they won’t be able to meet our domestic demands,” he stated.

The Group Executive Director, Oando Plc., Mr. Mobolaji Osunsanya on his own part reasoned that the country’s refineries cannot work in a regulated regime.