Just in: CBN restates commitment to boost liquidity in forex market

The Central Bank of Nigeria (CBN) has restated its commitment to boost liquidity in the forex market by continuing to promote orderliness and professional conduct by all participants in the Nigerian Foreign Exchange Market to ensure market forces determine exchange rates on a Willing Buyer – Willing Seller principle.

Nigeria’s currency, the Naira, slumped to N1045/$1 at the parallel foreign exchange market on Thursday as demand continues to regularly exceed supply.

The British Pound Sterling was bought at N1260 and sold at N1270 while the Euro goes for N1090.

Since the Central Bank of Nigeria (CBN) devalued the Naira in June with the aim of improving the country’s financials and inflationary impact, the local currency has lost more than 40 per cent against the US dollar.

According to forex traders, there is no dollar at the I&E window and no bank is selling, noting that banks now tell buyers to fund their account as they no longer issue letters of credit.

READ ALSO: FX crisis deepens as Naira drops to N1040/$1 at parallel market

“The scarcity is hard to explain at the moment. The situation is not decreasing. It may worsen if nothing is done. The foreign currency is not available”, he said.

However, the CBN in statement by the Director of Corporate Communications, Isa Abdulmumin and made available to National Daily, reiterated the apex bank that the prevailing Foreign Exchange (FX) rates should be referenced from platforms such as the CBN website, FMDQ, and other recognized or appointed trading systems to promote price discovery, transparency, and credibility in the FX rates.

“As part of its responsibility to ensure price stability, the CBN will boost liquidity in the Nigerian Foreign Exchange Market by interventions from time to time. As market liquidity improves, these CBN interventions will gradually decrease.

“Importers of all the 43 items previously restricted by the 2015 Circular referenced TED/FEM/FPC/GEN/01/010 and its addendums are now allowed to purchase foreign exchange in the Nigerian Foreign Exchange Market.

“The CBN is committed to accelerating efforts to clear the FX backlog with existing participants and will continue dialogue with stakeholders to address the issue. The CBN has set as one of its goals the attainment of a single FX market. Consultation is ongoing with market participants to achieve this goal.

The exchange rate disparity between the official and parallel market rates is now around 26 per cent or N265/$1.

This compares to around N290/$1 or 38.6% before the unification but at the current official rates, the exchange rate will have to depreciate to N1,200/$1 to achieve the disparity of 38.6 per cent.