Emefiele defends multiple forex window

The Governor of Central Bank of Nigeria (CBN), Godwin Emefiele, has rebuffed the circulating rumours that the apex bank has multiple foreign exchange (Forex) rates.

The newly-reappointed CBN Governor made the clarification while speaking at the University of Ibadan (UI) Distinguished Leadership Lecture Series which was organised by the university in collaboration with the apex bank.

According to him, the CBN does not have multiple exchange rates. He, however, agreed that the apex bank has multiple forex windows.

Based on his explanation, the CBN reached the decision to use multiple forex window out of the need to meet growing forex demands.

“Let me defend multiple foreign exchange. Banks have responsibility to buy and sell foreign exchange to everybody. If I want to travel, whether you have a bank account or not, you should be free to buy foreign exchange for your trip.

“We saw a situation whereby the CBN allocates forex to a bank, they only sold to their corporate customers where they can make more money and that put pressure on the market.

“Then we started allocating forex to banks for personal travel allowances and small and medium enterprises (SMEs), and corporates, and people said we are doing multiple exchange rates. That is wrong. I agree that we have multiple forex windows, not multiple exchange rates.”

Note that the foreign exchange market is one of the endogenous factors that affect the Nigerian economy. In other words, movements in the exchange rate usually have ripple effects in the economy. For instance, a rise in the exchange rate typically translates to a rise in the prices of goods and services; especially so for goods that are not produced within the country.