CBN head office, Abuja
By Obinna Chima 


The presidency has thrown its weight behind the Central Bank of Nigeria (CBN) on its decision not to devalue the naira and lift its currency curbs, which culminated in the decision on Tuesday by US investment bank JP Morgan & Chase to phase out Nigerian government bonds from its Government Bond Index for Emerging Markets (GBI-EM) by the end of October.

Speaking on the issue to THISDAY on Wednesday, a top presidency official who preferred not to be named, said the CBN, Federal Ministry of Finance and Debt Management Office (DMO) had the endorsement of the presidency in their joint statement reacting to JP Morgan’s announcement on the delisting of Nigeria’s bonds from its indices starting from September 30.

The official while acknowledging that JP Morgan had raised concerns over liquidity in Nigeria’s currency market, he argued that the joint statement by the finance ministry, CBN and DMO showed that the federal government was not in support of the devaluation of the naira as this would lead to a further spike in inflation and to the export of jobs.

He quoted JP Morgan as stating that “foreign investors who track the GBI-EM series continue to face challenges and uncertainty while transacting in the naira due to the lack of a fully functional two-way FX market and limited transparency”.
“However, CBN, the finance ministry and DMO made it clear that it introduced an order-based, two-way forex market,
resulting in the stability of the exchange rate in the interbank market over the past seven months and largely eliminated speculators from the market.

“The CBN also enhanced transparency by mandating that all forex transactions are posted online on the Reuters trading platform so that all stakeholders could easily verify all transactions in the market.

“All this was done to ensure that participants are not allowed to simply trade currencies, speculate against the naira and engage in round-tripping, but are only in the market to fulfill genuine customer demand to pay for eligible imports and other transactions.

“Yet, JP Morgan’s preference is for Nigeria to devalue its currency in the face of falling oil prices and dwindling reserves in order to satisfy foreign portfolio investors who do not have Nigeria’s interest at heart,” he said.

The official said if the central bank had succumbed to JP Morgan and foreign investors’ sentiments, this would have led to a massive depreciation of the Nigerian currency, leading to import-induced inflation, exporting jobs, and the continued depletion of Nigeria’s foreign reserves.

“Lest we forget, there is a high possibility that the US Federal Reserve could raise interest rates very soon and with the economic problems in China, foreign portfolio investors will exit the Nigerian economy without a second glance.

“Should we deplete our reserves now, how will we meet their demands when they elect to exit the Nigerian market in droves for other destinations?” he asked

The presidency official added that another major concern for the federal government was the fuel subsidy regime.

“Devaluation at this time will be disastrous because since the fall in the price of crude oil over a year ago, foreign exchange differentials alone today account for almost 50 per cent of the subsidy bill that is paid by the federal government to oil marketers.

“Bank charges and interest rates account for another 25 per cent while the difference between the actual market price of petrol and the official price stipulated by government, which is the real subsidy element, accounts for another 25 per cent of the total subsidy bill.

“So should the CBN devalue, the foreign exchange differential will rise and put more pressure on the government’s finances,” he explained.

The official added that going back to the two-way quote system demanded by JP Morgan would have adverse consequences on the little foreign reserves Nigeria has, which provide cover for only five months of imports.

“So we are concerned about all this and will continue to support the CBN to encourage market stability over a sustained period and meet demand for only legitimate transactions,” he said.
He noted that whilst the federal government considered the inclusion of Nigeria’s bonds on the JP Morgan GBI-EM index good for the integration of the Nigerian economy with other global markets, “but if remaining on it would amount to devaluing the naira, increasing inflation, exporting jobs and depleting our reserves, it is not worth the bother. It would amount to a vanity project not in Nigeria’s best interest”.
He assured THISDAY that as the federal government moves to block more leakages in the public sector and unfold its economic agenda in the weeks ahead, Nigerians would begin to feel the gains of its policies.

“The government and CBN’s primary responsibility is to enunciate policies that would reverse the decline in the country’s GDP, create jobs and keep inflation low.
“A devaluation of the currency will hamper these objects. So if the price we have to pay for this is our ejection from the JP Morgan index, it is a temporary price we will have to live with until our finances improve,” he said.

http://www.thisdaylive.com/articles/-why-fg-is-against-devaluation/219852/

If this report and article is true and correct then buhari and CBn are doing a good job. The interest of the nation supercedes that of any other investor or foreign country operating or wanting to operate in nigeria

This is brilliant, epic reply. JP Morgan, hedge funds, bankers, speculators and all these other asset managers cannot be dictating the pace of our economy. We will not be coerce or cajole to take inimical decision at the expense of our own economy.

Excellent policy .... We can't be held ransome by some bunch of profit making financial powers

“The government and CBN’s primary
responsibility is to enunciate policies that
would reverse the decline in the country’s
GDP, create jobs and keep inflation low.
“A devaluation of the currency will hamper
these objects. So if the price we have to pay
for this is our ejection from the JP Morgan
index, it is a temporary price we will have to
live with until our finances improve,” he said.

The above gave the summary of the whole brouhaha ...

it Also gave me hope that Nigeria is on the path to self discovery,JP Morgan wants devaluation we said NO, he decided to remove us from his list, well he can go to HELL, we'll make it all alone.

Nice..

.

The reply is so apt. Government should be for the people and not some greedy investors who only think about their profits.

Ride on CBN, JP Morgan can go kiss shecow in his grave.

The West with their manipulative institutions should jst leave our Rising Nigeria.

Nigeria will rise again.

onatisi:
If this report and article is true and correct then buhari and CBn are doing a good job. The interest of the nation supercedes that of any other investor or foreign country operating or wanting to operate in nigeria

Is this really you?? Or aliens have taken over your moniker??

By the way, I gave this its first "like" & would have given it 20 more if it were possible..

Thumbs up!

The government and CBN’s primary responsibility is to enunciate policies that would reverse the decline in the country’s GDP, create jobs and keep inflation low.
“A devaluation of the currency will hamper these objects. So if the price we have to pay for this is our ejection from the JP Morgan index, it is a temporary price we will have to live with until our finances improve,” he said.

Now we have a responsible Government whose main interest is the welfare of its people...

Sai Baba
Sai Emefiele

We shall surely overcome!!

Is that all?


And the lack of economic direction is conveniently left out because of course, we have to blame the foreign investors (or hedge fund managers if you may) but what about the local investors and the Nigerian diaspora investors who make up about 40% of direct foreign investments?? I guess our patriotic zeal doesn't cover them too.


CUT THE CRAP!!!!
Of course all investors are here to make money and if the economy was being properly managed, there will be no rush to pull out investments so you can beat around the bush all you may but losses of about $7b on the SE in 3months in a developing economy doesn't scream speculation to me, it screams mismanagement and lack of confidence in economic leadership

Kudos to CBN and the presidency for standing up to JP Morgan's manipulative tendency. Had they yielded to the counter productive demand of Morgan, dollar to naira exchange would have been around 350 by now. Inflation will skyrocket, productivity will nosedive and a lot of jobs would have been lost by now.

As said in the report, the temporary set back of being removed from bond index is temporary and it actually comes with better and more sustainable benefits in the days ahead.

Double post.

BraniacX:
Is that all?


CUT THE CRAP!!!!
Of course all investors are here to make money and if the economy was being properly managed, there will be no rush to pull out investments so you can beat around the bush all you may but losses of about $7b on the SE in 3months in a developing economy doesn't scream speculation to me, it screams mismanagement and lack of confidence in economic leadership

I do not curse nor insult people but I'm going top make an exception in your case!!

Not only is your brain (your moniker is a major misnomer) defective, it is full of CRAP as well!!

If that fat cheeked gele woman with her textbook economics had not made a mess of the economy,or that incompetent fisherman you wailers still insists on worshipping had not encouraged his PDP gang of bandits to loot the treasury dry in the time of plenty(when oil was 140$ per barrel)we wouldn't be where we are today.

Furthermore, if the little left had not been frittered away by your precious Jona to bribe his way back to office (to wreak more havoc) maybe USD would not be its way to back to 230.

Get the right info,(stop listening to Olisa Metuh & Fayose)JP Morgan put Nigeria on the watchlist since january & only pulled the plug now cos they couldn't get us to bend to their dictates on economy policies!!!


May devil release your bitter soul.

There is a light at the end of this economic tunnel for Nigeria!
Need anything from Jumia? Contact me now!

BraniacX:
Is that all?


And the lack of economic direction is conveniently left out because of course, we have to blame the foreign investors (or hedge fund managers if you may) but what about the local investors and the Nigerian diaspora investors who make up about 40% of direct foreign investments?? I guess our patriotic zeal doesn't cover them too.


CUT THE CRAP!!!!
Of course all investors are here to make money and if the economy was being properly managed, there will be no rush to pull out investments so you can beat around the bush all you may but losses of about $7b on the SE in 3months in a developing economy doesn't scream speculation to me, it screams mismanagement and lack of confidence in economic leadership

And who was responsible for the mismanagement in the first place?

We all must continue to remember the type of economy this regime inherited. It was an economy which had abt 90% of its budget on recurrent expenditure. An economy that was solely dependent on crude export wgich meant the crash in crude price badly worsened the situation. An economy that had the FG borrow to pay its workers in March and April of this year.

What the current regime is trying to do is to stop the bleeding and make sure an already bad situation doesn't become worse.

The government's position makes sense here.

Prior to 2012 when Nigeria was listed by JP Morgan, our economy was thriving, so what's the fuss about them delisting us if it will only affect these profiteering racket rather than the majority of Nigerians.

Ok

In the next few months, Nigeria is going to witness a strong economic policy in good direction. I trust this administration.

nice one CBN

Thank God this government is skeptical about the invisible hands of market.
Thank God this government is having business in the business sector.

onatisi:
If this report and article is true and correct then buhari and CBn are doing a good job. The interest of the nation supercedes that of any other investor or foreign country operating or wanting to operate in nigeria

This is what some pple don't understand.JP Morgan is just trying to protect it interest.More devaluation of naira will have negative effects on our economy.We must not be west dummies 4ever.Let's try out of d books methods.Ride on joor.

Politics aside, I'm with Buhari and Emefiele on this one as further devaluation of the Naira will only more hardships and jobs losses. The interest of the nation should come first.

BraniacX:
Is that all?


And the lack of economic direction is conveniently left out because of course, we have to blame the foreign investors (or hedge fund managers if you may) but what about the local investors and the Nigerian diaspora investors who make up about 40% of direct foreign investments?? I guess our patriotic zeal doesn't cover them too.


CUT THE CRAP!!!!
Of course all investors are here to make money and if the economy was being properly managed, there will be no rush to pull out investments so you can beat around the bush all you may but losses of about $7b on the SE in 3months in a developing economy doesn't scream speculation to me, it screams mismanagement and lack of confidence in economic leadership

Don't tell mi u just wrote this without proper understanding of what u read?SMH.

courage89:
This is brilliant, epic reply. JP Morgan, hedge funds, bankers, speculators and all these other asset managers cannot be dictating the pace of our economy. We will not be coerce or cajole to take inimical decision at the expense of our own economy.

EoD.

I'm feeling my country jere,this feels like what happens in the Arab world,seclusion of the economy for amazing growth!!!

Lalasticlala Seun, good morning. Pls let's start the day with this news. There is message for everyone there.

modath:

Is this really you?? Or aliens have taken over your moniker??
By the way, I gave this its first "like" & would have given it 20 more if it were possible..
Thumbs up!
[color=#770077][/color]
Now we have a responsible Government whose main interest is the welfare of its people...
Sai Baba
Sai Emefiele
We shall surely overcome!!

Oga na me oooo.I have always said it that if buhari performs even we his fiercest opponents and critics will have no choice but to applaud and acknowledge his efforts. The most important thing is for Nigeria to be on the right track.

onatisi:
Oga na me oooo.I have always said it that if buhari performs even we his fiercest opponents and critics will have no choice but to applaud and acknowledge his efforts. The most important thing is for Nigeria to be on the right track.

Na madam oooo, no let me put baby down begin fight you thiiis early morning ooo

Wish many on the other side will think like you cos at the end of the day no politician puts food our respective tables (jobbers na on another level) so we should use our brains..