CBN debunks Fake News on Naira Devaluation, urges caution

BrandPower Magazine 01/06/2023Last Updated: 01/06/2023

2 minutes read

The Central Bank of Nigeria (CBN) has debunked the news by Daily Trust newspaper that it has devalued the Naira as fake news.

In a press statement obtained by BRANDPOWER Dr. Isa AbdulMumin, acting Corporate Communications directors said: “The attention of the Central Bank of Nigeria (CBN) has been drawn to a news report by Daily Trust Newspaper of June 1, 2023, titled “CBN Devalues Naira To 630/$1”.

AbdulMumin however said: “We wish to state categorically that this news report, which in the imagination of the newspaper is exclusive, is replete with outright FALSEHOODS and destabilizing innuendos, reflecting potentially willful ignorance of the said medium as to the workings of the Nigerian Foreign Exchange Market.

“For the avoidance of doubt, the exchange rate at the Investors’ & Exporters’ (I&E) window traded this morning (June 1, 2023) at 465/US$1 and has been stable around this rate for a while.”

He said “The public is hereby advised to ignore the news report by Daily Trust in its entirety, as it is speculative and calculated at causing panic in the market.”

AbdulMumin enjoined media practitioners “to verify their facts from the Central Bank of Nigeria before publishing in order not to misinform the public.”

A financial expert, Gimba Kakanda clarified in a Facebook post that the report that CBN has devalued the Naira is misleading or perhaps an honest reporting mistake by journalists who lack understanding of how CBN’s I&E Window operates.

What they call devaluation is the exchange rates established in accordance with the prevailing market conditions.

The I&E FX Window, which stands for “Investors’ and Exporters’ Forex Window,” was adopted by the Central Bank of Nigeria in 2017.

It’s a dedicated trading segment for investors, exporters, and end-users. It enables foreign exchange transactions to occur at exchange rates determined by prevailing market forces, which means these rates fluctuate persistently.

Operating as an electronic trading system, the I&E Window allows buyers and sellers to submit their bids and offers for different currencies. The rates at which trades are executed within the window are determined by the forces of supply and demand, reflecting the prevailing market conditions.

This trading window is open to investors, exporters, authorized dealers (commercial banks), portfolio investors, and other individuals or organizations engaged in foreign exchange transactions. It operates within a framework defined by the CBN, which sets guidelines and regulations to ensure fair and transparent trading practices.

Last year, the apex bank announced that they had attracted over US$50 billion in investments to Nigeria within three years as a result of this practice. Meffy even justified the place of the Window, explaining that CBN’s decisions were consistently guided by the prevailing economic fundamentals—and that’s what the Window does.

Whether the Window has truly improved our liquidity as claimed is left for experts to figure out, but the rates generated through the platform aren’t static.

The N630/$ that our journalists reported as devaluation is actually the highest spot rate in a day, and lowest rate of the day in question was N410/$. It’s determined by the forces of demand and supply, and would keep on changing.

You can monitor the I&E rate via this website, fmdqgroup.com/exchange/, revealed in the CBN circular announcing the Window, and track the fluctuations of the exchange rate across hours every day. The closing rate for yesterday was ₦464.67.