As dollar scarcity persists, CBN warns political class on illicit conversion of currency for elections



Uba Group

The Central Bank of Nigeria has clarified the statement made by the Governor, Godwin Emefiele, at Tuesday’s post-Monetary Policy Committee meeting briefing, warning bank customers against converting the naira to foreign exchange, for electioneering purposes.

The Bank’s Director, Corporate Communications Department, Osita Nwanisobi, made the clarification in a chat with newsmen in Lagos, on Wednesday, July 20, 2022, following what he described as attempts by persons to deliberately misrepresent the import of Emefiele’s caution on electioneering spending by the political class.

According to Nwanisobi, the warning by the CBN Governor was to those who sought to convert the Naira from their accounts into foreign exchange for election campaign and not those who seek to exchange the currency for legitimate purposes such as payment for tuition and other personal expenses.

Reiterating the Bank’s position, he said the CBN also frowned at the conduct of unauthorized movement of funds within and outside the country and would use tools at its disposal to check the movement of illicit funds.

While maintaining that the Bank, in line with its mandate, had discretionary power to prevent persons from conducting unauthorized transactions, Nwanisobi said the CBN was within its statutory limits to mop up the excess liquidity in the vaults of the institutions its regulates, so they do not get involved in speculative activities.

He therefore urged Bank customers not to get involved in unauthorized movement of funds for currency conversion in order not to fall foul of the extant laws of the land. Nwanisobi also admonished Nigerians to be more patriotic as it relates to the Naira, noting that it is the duty of every citizen to support the CBN in preserving the intranational value of the Naira.

To curb rising inflation in the country, the CBN has increased lending rate otherwise called Monetary Policy Rate twice between May and July. Base lending rate now stands at 14 percent after the CBN Monetary Policy Committee meeting which ended on Tuesday in Lagos.

Currency has been identified as one of the five factors that has driven inflation to its current position in the last six months. The MPC indicated that Dollar shortages persisted since the last policy meeting on 24 May, given limited FX supply at the official channels amidst increased FX demand underpinned by summer travels and political activities.

“Accordingly, we understand that travellers and manufacturers have continued to recourse to the parallel market as most of their FX needs remain unmet at the official windows. Consequently, since the last policy meeting, the local currency depreciated by 1.3% apiece to NGN424.63/USD and NGN617.00/USD at the IEW and parallel, respectively, as of 14 July,” MPC noted.