IMPI commends Tinubu, CBN over naira appreciation, stabilisation

IMPI maintained that the rate with which the naira is appreciating is a reflection of the bouquet of positive policies introduced by the Federal Government and the Apex Bank.

In a statement signed by its Chairman Niyi Akinsiju, on Wednesday in Abuja, the media group argued that the President Tinubu-led government and the CBN deserve commendation for policies addressing the supply and demand sides of the foreign exchange market.

The statement read: “To properly put this in perspective, we need to, as a matter of fact, from the outset, commend the dexterity of the CBN Governor, Olayemi Cardoso, in conceiving policies and deploying them to time and target as he virtually willed into existence a new monetary policy and exchange rate ecosystem by using policy actions to address both the supply and demand sides of the domestic foreign exchange market.

“One of the profound policies introduced to the market on 31st January, in the graduated steps to take charge of the market, was the administrative admonition to Nigeria’s Deposit Money Banks (DMB) to bring their Net Open Position (NOP) to prudential limit by 1st January, 2024. That was just less than a 24-hour notice to the banks.

“CBN’s NOP mandate to the banks implies that no bank holds 20 percent long position that is, hold more foreign currency assets than liabilities by more than 20 percent. The strategic objective of this mandate was to get the banks to start offloading into the open market, about $7 billion they kept in long currency positions. That was a maneuver to address forex supply side concerns.

“On the same day, January 31, when the CBN relayed the important NOP to banks, the apex financial sector regulatory body also issued the new International Money Transfer  Organisations (IMTO) rules for remittances in Nigeria – the rules, which are actually a bouquet of auxiliary policies, are generally understood to mean occasions of recurring person-to-person (P2P) payments of relatively low value from persons living abroad to persons in their home country which now account for a sizeable portion of Nigeria’s foreign exchange in-flow,” IMPI noted in the statement

The policy think tank also outlined the effect of the clearing of forex backlog on the naira, emphasising thwt; “perhaps, more instrumental to the resurgence of the Naira in the forex market is the clearing of the more than $7 billion forex backlogs in form of outstanding CBN commitment on swap deals and due returns to foreign investors who needed to recover forex they imported into the country or those desiring to convert monies earned in local currency in the course of their businesses to forex.

“The inability of the CBN to fund the forex needs of these different economic agents constituted an albatross of sorts on the national economy and was one of the major reasons foreign investors stayed away from the country. With the clearing of the forex backlog, we can submit that the national economy is on the threshold of capacity optimization.

“The latest in this regard is the sale of dollar to BDCs at the rate of N1,251/$, an indication of the effective rate in the forex market, and for us, it signposts the possibility of increased value of the naira over the next few months,”it surmises,” IMPI added.