The reforms introduced thus far by the Central Bank of Nigeria (CBN) in the foreign exchange market will impact positively in its stability and strengthen the value of naira, Deputy Governor, Economic Policy, Mr. Muhammad Abdullahi, said. Abdullahi said the steps led to the current moderation in foreign exchange, easing pressure in the market, with the massive reduction in the premium between the official rate and that of the Bureau De Change (BDC) segment.
He stated this in Abuja while declaring open the 2023 Economic Policy Directorate Retreat of the bank with the theme: “Foreign Exchange Market Reforms and Price Stability in Nigeria.” 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.
While acknowledging 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, the CBN Deputy Governor said that the steps so far taken by the bank to unify the exchange rate and stabilise the foreign exchange market. 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 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.