Foreign currency purchases in Nigeria will be on the interbank market from Monday June 20, Central Bank Governor, Godwin Emefiele, announced Wednesday.
To address the illiquid foreign exchange market, which has been gummed up for almost a year, the governor disclosed that the CBN will intervene through primary dealers who will feed the market as well as clear the FX backlog which had mounted following the introduction of a hard currency peg.
Emefiele said there will be a single FX market and promised that the market will be transparent and warned speculators to stay away off the market.
“There is only one window and that is what it will be. We will ensure that there are no rent seekers and speculators,” said Emefiele.
Bayo Adeyemo, country treasurer at Citi Bank in reaction to the MPC’s policy shift says investors will be upbeat, as the move resolves the uncertainty that trailed May 24’s announcement to adopt a more flexible foreign exchange market, although with no clear guidelines.
“Investors could not have asked for more, and I feel the CBN has taken a bold step. This will go a long way in clearing the FX backlog in the market and well as restore liquidity,” he said.
The apex bank governor allayed concerns surrounding the FX backlog as he disclosed that the CBN had sufficient reserves to surpass pent up dollar shortages.
Analysts say the certainty the FX guidelines has brought will restore forex inflow to Africa’s largest economy.
“There will be an immense level of confidence in the market. It will attract FPI inflow which has been on the side-lines amid an uncertain environment,” said Kyari Bukar, chairman of Nigeria Economic Summit Group (NESG).
The governor added that the 41 items earlier banned from accessing foreign exchange will go unabated as policy makers in 180 million Nigeria explore strategies to cut down import appetite and boost exports.
He also noted that exporters will now be allowed to sell their export proceeds on the interbank market at the ruling rate, as against the N199 official rate which had short-changed exporters and discouraged exports.
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