The Central Bank of Nigeria (CBN) has said non-remittance of dollars to foreign reserves by the Nigeria National Petroleum Corporation (NNPC) is responsible for naira’s free fall.
Daily Trust reports that as at the close of work Tuesday, the naira traded for N700/$1 at the parallel market and N415.96/$1 at the official market.
The CNB explained that NNPC and its subsidiaries are the sole managers of crude oil which accounts for more than 80 per cent of Nigeria’s Foreign Exchange (forex) earnings.
According to the CBN report titled: “The forex question in Nigeria: Fact sheet”, the apex bank disclosed that “domestically, there has been zero dollar remittance to the country’s foreign reserve by the NNPC, insisting that the CBN does not print dollars.
The report states: “As noted by the CBN Governor, Godwin Emefiele, monetary policy alone cannot bear all the burden of the expected adjustments needed to manage these difficulties. It’s our collective duty as Nigerians to shore up the value of the naira.”
According to the apex bank, Nigeria earns foreign exchange from four sources – proceeds from oil exports; proceeds from non-oil exports; diaspora remittances, and Foreign Direct/Portfolio Investments (capital flows).
“Considering Nigeria’s heavy dependence on oil exports for foreign exchange earnings and government revenue, the impact of the oil market crash severely affected the government’s naira revenue and other macroeconomic aggregates including economic growth. Hence, the rate of exchange between the naira and other currencies has widened over the past few years.
“There is un-abating demand for foreign exchange for both goods and services, thereby creating a demand challenge. The current exchange rate of the Naira, like other major currencies, is not driven by cryptocurrencies, given the volatility in the cryptocurrency space, which lost over two trillion in the past two years in face of high inflation.
“The United States (U.S.) dollar is gaining against all major currencies of the world. The imbroglio in Nigeria’s tertiary education sector has triggered an exodus of students from Nigerian schools, with its attendant payment of fees in foreign exchange. Summer travels by Nigerians has also impacted the demand side of the foreign exchange market,” it said.