FG promises more FX reforms as Naira woes intensify

The Minister of Finance and coordinating of the economy, Mr. Wale Edun has stated that around $10 billion of forex inflows is expected within weeks rather than months.

Since the unification of the foreign exchange market in June, the naira’s value has slumped by over 100 per cent on the parallel market.

The current CBN management has introduced a slew of measures to provide liquidity but the chasm between the rate on the I&E window and parallel market continues to widen.

On June 16, the government unified the naira, effectively devaluing the currency from approximately N450/$1 to over N700/$1.

Since then, the official exchange rate has sunk to lows of N848/$1, while the NAFEX rate currently stands at N783/$1.

The exchange rate between the naira and dollar opened the week at N1,200/$1 on P2P platforms on Monday as traders continue to face demand pressures amidst dwindling supply.

According to checks, quotes opened at about N1,200/$1 however, in the afternoon, sellers quoted as high as N1,210/$1.

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At the black market where the exchange rate is sold unofficially, quotes are going for N1200/$1 for cash trades and N1,250-N1300 for “inflows” aka wired transfers. It is important to add that actual crossed rates might be higher or lower depending on who is buying or selling.

Edun who stated this during a panel session at the ongoing Nigeria Economic Summit and answered questions concerning stabilizing the foreign exchange market and enshrining liquidity in the market, said in addition, from the supply of foreign exchange through NNPC, increased production, reduced expenditure, from transactions such as forward sales, from discussions with sovereign wealth funds, that are ready to invest and provide advanced alongside that investment.

The Minister further said President Tinubu has signed two executive orders geared towards ensuring liquidity in the forex market.

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“Mr. President announced that he had taken measures to ease illiquidity in the forex market which we know is very problematic at this time.”

“The market is illiquid; it’s not functioning properly because there is no supply and there are various reasons for that. The solution that the President has put on the table is that he has signed an executive order that effectively allows under forbearance all the cash that is in the domestic economy to legally come into the formal money supply”

“Along with that, there is another executive order that allows domestic issuance of foreign currency instruments so that they will have the incentive to provide that foreign exchange from whatever source.”