Follow Us on Google
The Central Bank of Nigeria (CBN) has assessed the reforms it has so far implemented in the foreign exchange market and described them as potent efforts that will eventually stabilise the market and improve the value of the naira that has tumbled several times in recent months.
The Bank’s Deputy Governor, Economic Policy, Mr. Muhammad Abdullahi, who stated this at the weekend, added that the measures taken to make the Nigerian foreign exchange market more efficient have started to moderate the pressure in the foreign exchange market, with the massive reduction in the premium between the official rate and that at the Bureau De Change (BDC) segment.
He noted that the premium between the BDC and the official rate had narrowed to 12.0 per cent in end-January 2024 from 61.93 per cent in January 2023, adding that the narrowing between the official and unofficial markets validated the impact of policy actions by the Bank, despite hedging and speculative activities.
He acknowledged that some challenges remained as inflationary pressures continued to pose substantial downside risks to domestic and international investment and the overall macroeconomic policy objective of ensuring sustainable growth.
Furthermore, Mr. Abdullahi enumerated the steps taken by the bank, including the re-adoption of the “willing buyer, willing seller” market-determined rate and the lifting of access restriction to forex from the Nigerian foreign exchange market on some 43 items to eliminate distortions in the forex market.
He also recalled that the apex bank had cleared a significant portion of the FX backlog from matured forward contracts and was collaborating with the fiscal authorities to coordinate policy initiatives to stimulate foreign investment.
To mitigate the challenges experienced in stabilising the foreign exchange market, he said the CBN harmonised the reporting requirements on foreign currency exposure of banks, and issued revised guidelines for International Money Transfer services in Nigeria to enhance ease of doing business for International Money Transfer Operators (IMTOs), boost remittance and other capital inflows, limit the outflow of foreign currency and illegal financial flows.
He said other measures taken include the removal of the allowable limit of the exchange rate quoted by IMTOs to liberalise further the Nigerian foreign exchange market and the issuance of a circular on financial markets price transparency to enhance efficient price discovery and orderly conduct in the foreign exchange market.
