In its efforts to further expand a transparent foreign exchange (forex) regime, the Central Bank of Nigeria (CBN) has removed the previous cap on exchange rates quoted by international money transfer operators (IMTOs).
In a memo with reference number, TED/FEM/FPC/GEN/001/002, Director, Trade and Exchange department, Dr Hassan Mahmud, said the policy is aimed at liberalising the forex market and ensuring transparency in forex transactions. It will also boost diaspora remittances and other foreign capital inflows to Nigeria.
The new circular follows a similar one that seeks to address excessive foreign currency change speculations within the economy.
Following the action, the naira seems to be gaining strength from the recent policy shift of the CBN as the Nigerian currency exchanged for N1,450 at the unofficial market yesterday. The British Pound was exchanged for N1,931.066 while N1,644.121 was exchanged for one Euro and N1,095.542 was exchanged for one Canadian Dollar.
In the latest circular, CBN stated: “IMTOs are hereby allowed to quote exchange rates for naira payout to beneficiaries based on the prevailing market rates at the Nigerian forex market on a willing seller, willing buyer basis.”
Indeed, the new directive follows the principle of a ‘willing seller, willing buyer’ basis, meaning that exchange rates will be determined by market forces. This will also tighten the noose on the banks that hitherto profit from the former practice.
Analysts said the end game is to achieve convergence with the parallel market and more inflow into the official channel, which now allows CBN to intervene as needed.
Vice President, Kashim Shettima, has expressed his disappointment with Nigerians who find amusement in the depreciation of the Naira against the dollar, labelling them as ‘clowns.’ Shettima made this known while speaking at a function in Abuja on Wednesday.
In the viral video, Shettima said: “It is not only disheartening and disenchanting, but also heartbreaking that yesterday when the Naira culminated to N1,500 to the dollar, instead of us to coagulate into a single force and salvage our nation economy, sadly, some clowns are celebrating on Twitter of an impending implosion of the Nigerian economy.”
Meanwhile, Bureau De Change (BDC) operators have denied suspending operations due to a lack of liquidity in the forex market. At the popular Zone Four in Abuja yesterday, operators were seen carrying out their businesses.
Adamu Abdullahi, who is an operator, said: “I don’t know those that said they were going to suspend operation. As you can see, we are doing our business. This business is buying and selling. I sell what I buy.”
Speaking on the issue, Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria (ABCON), also denied the suspension of operation. He explained that it is only the national executive of the association that is empowered to issue such a directive.
In another development, former Vice President, Atiku Abubakar, faulted the Federal Government’s directive to CBN to take over crude oil sales proceeds from the Nigeria National Petroleum Company Limited (NNPCL). According to him, the directive is not legal and it undermines the operational independence of the national oil company.
In a statement he personally signed and released to journalists on Thursday, the presidential candidate of the Peoples Democratic Party (PDP) in the 2023 general election said: “Without prejudice to the possibility of any good that was intended in the decision of the Federal Government to make CBN take over the responsibility for crude oil sales proceeds from NNPCL, it must be clearly stated that the action is not legal in its application.”