As New Currency Notes Rekindle Battle to Save Naira

As New Currency Notes Rekindle Battle to Save Naira


The unveiling of the new currency notes by President Muhammadu Buhari, the tightening of interest rates by the Central Bank of Nigeria and the renewed resolve of the Economic and Financial Crimes Commission to tackle currency speculators were some of the measures rolled out last week to tame the value of the naira, reports Festus Akanbi

Last week, the ongoing efforts to rein in the value of the naira gained a higher momentum with a cocktail of actions taken by the monetary authority in line with the hint given in October by the Central Bank Governor, Mr. Godwin Emefiele to redesign the naira and halt the falling value of the local currency.

Many Nigerians were taken by surprise on Tuesday when the governor announced the planned unveiling of the new currency notes by President Muhammadu Buhari on Wednesday far ahead of the earlier date-December 15, announced by the CBN.

Emefiele gave the hint at the presentation of the decisions of the Monetary Policy Committee of the apex bank which raised the Monetary Policy Rate (MPR) by 100 per cent basis points to 16.5 per cent.

Nigerian financial analysts were still dissecting the implications of the hike in the interest rates on Wednesday when President Buhari, at the Federal Executive Council meeting at the Presidential Villa, Abuja formally presented the new currency notes, N200, N500 and N1000 to Nigerians.

At a briefing after the ceremony before the Federal Executive Council meeting, the CBN governor disclosed that there will be a heavy restriction on the volume of cash that people can withdraw over the counter, as it works with the Economic and Financial Crimes Commission (EFCC) to monitor the purpose of any heavy transactions.

The redesigned currency notes, he asserted can never be counterfeited, adding that to forestall such occurrence, the CBN will redesign the notes after every five to eight years.

Following the unveiling of the new notes which began circulation as of Wednesday last week, the CBN governor announced that the apex bank is now more determined to make Nigeria a cashless economy, as in other climes.

During the ceremony which was held before the council meeting, President Buhari underscored the importance of re-designing the new naira notes. He explained that it will aid the country to address the issue of illicit financial flows and corruption, improve the nation’s economy, as well as ensure advancement in the value of the naira.

The president, however, appealed to Nigerians and urged them to embrace the new policy to re-design the naira.

For most of last week, Naira closed unchanged at N780 per dollar at the unofficial market, following moderation in demand for the dollar. Naira had depreciated against the dollar at the parallel and official market following the shortage of the greenback, occasioned by declining inflows, high import demand, oil theft and subsidy, among others.

After the CBN announced plans to redesign and replace the nation’s banknotes, the local currency weakened to as low as N890 per dollar at the unofficial and N446/1$ at the official market, known as the Investors and Exporters (I&E) forex window.

Analysts described Wednesday’s event as the icing on the cake in a coordinated effort to halt the current slide in the value of the naira after the authorities had earlier unleashed the EFCC against currency speculators and hoarders.

 EFCC Reads the Riot Act to Speculators

 Chairman of EFCC, Abdulrasheed Bawa, who expressed his belief that the new naira policy would lead to the appreciation of the currency, reiterated the EFCC’s determination to crack down on currency speculators as the countdown to the deadline on the exchange of old notes for new ones continues.

“We assure Nigerians that we are always ready to receive reports of any person with suspicious hidden money, and if investigated and found to be true, we will give five per cent of the money to them,” Bawa said.

Analysts Upbeat on CBN’s Monetary Policies

Looking at the CBN decisions, from the international perspective, Managing Director, Chief Economist, Africa and Middle East Global Research of the Standard Chartered Bank, Razia Khan, told THISDAY that what is needed at this juncture is foreign exchange reforms in Nigeria.

Rallying support for the ongoing efforts to shore the value of the naira, She said: “In our view, with significant pressures ahead – tighter global conditions, the risk of slowing global growth, weaker oil prices and pressure on FX reserves, FX reforms are more important than ever.  While the CBN has taken comfort from the October slowing in m/m inflation, we’re not sure how much can be read into this – especially given the likelihood of fuel subsidy reforms post-election and ongoing agri-pressure given recent climate-related risks.  Lower inflation settings and the restoration of a better-functioning FX market would serve Nigeria well, given these challenges.”   

The reform, according to her should include a better-functioning I&E window, so the parallel rate becomes marginal in the determination of pricing.

Speaking on the MPC decision, the Executive Director, of Cordros Capital, Mr. Femi Ademola stated that under normal circumstances, the decision of the MPR is in the right direction. It is meant to curb inflation as is currently being done globally, adding that the Nigerian action is also aimed at curbing exchange rate volatilities.

“It is expected that the increase in MPR will lead to an increase in lending rate and thus make cash expensive for frivolous spending and exchange rate speculations.

“Whether the decision will have the intended consequences is another matter entirely. Due to the sizeable difference between the official and parallel, it is probable for people to make more returns than borrowing costs, no matter how expensive. It, therefore, means that this decision may not make any significant impact,” he stated.

 According to the Managing Director/Chief Executive, MD/CEO SD&D Capital Management Limited, Mr. Idakolo Gbolade, the CBN’s decision to raise the interest rate is predicated on its constant effort to tame Nigeria’s stubborn inflation which has not relented despite consistent increases in interest rates in past six MPC meetings. The effort, he said,  is also geared towards mopping up excess liquidity in the economy. 

He believes the CBN, by its decision, is also aiming at boosting investors’ confidence and profitability projections as regards foreign inflows which can impact positively our foreign reserves. 

He, however. expressed the fear that the MPC decision could further cause the value of the Naira to continually decline due to the persistent scarcity of dollars.

On the other hand, Gbolade maintained that “If the foreign investors positively appraise the new MPC decision, it could signal a turnaround for the Naira as the much-needed investment in a foreign currency will start coming into the system.” 

ABCON Lobbies for Role in Forex Market

Last week also, the Association of Bureau de Change Operators renewed their lobby to get a prominent place in the CBN’s efforts to sanitise the foreign exchange market in a way to reposition the local currency.

The ABCON President, Aminu Gwadabe, in an interview with THISDAY, said he is confident in the capability of the apex bank to halt the current slide in the value of the naira because according to him, the CBN has an array of monetary policies to mitigate the impacts of foreign exchange rate volatility, inflationary pressures, dwindling buffers etc.

He held the view that the harmonisation of fiscal restraints and monetary policies is laying the foundation for effective policy framework implementation.

“The recent backing of the CBN Naira redesign policy by the president is very commendable in this regard,” he said.

According to him, the news of oil discovery and other minerals export in the northern part of the country is a good omen, adding that harnessing the gains with good coordination with fiscal discipline will go a long way in uplifting the fortune of the naira”.

 He disclosed that the apex bank’s consistency with the interest rate increase to rein in inflation and attract foreign capital in higher investment yields instruments has started yielding positive impacts in the bonds and the stock market, expressing the confidence that the effort would enhance the value of the local currency.


Calling for collaboration between the CBN and ABCON, Gwadabe said: “The CBN can leverage the existing relationship in line with our cardinal objectives of deepening liquidity and establishment of a market clearing rate in the economy.”

He recalled that the Association and its members had partnered with the CBN in currency disbursement between 2016 and late 2021, saying the effort had succeeded in closing the gap between the two exchange rates in the system.

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