• Business - Economy
  • Updated: February 05, 2024

CBN guidelines on forex will stabilise naira — Group 

CBN guidelines on forex will stabilise naira — Group 

The Independent Media and Policy Initiative has stated that the recent policies implemented by the Central Bank of Nigeria (CBN) will contribute to stabilizing the naira in the foreign exchange market.

Niyi Akinsiju, Chairman of the non-governmental organization, made this assertion in a statement issued on Sunday in Abuja.

Akinsiju emphasized that these policies would help reduce volatility in the forex market and improve accountability within the banking sector.

He further noted that the CBN's proactive measures reflect the commitment of the new management to curb any exploitative practices by banks within the system.

He stated, “The prudential guidelines as issued by the CBN, unveils the gaming of the foreign exchange market by Deposit Money Banks.

"The DMBs hoard the forex they had either borrowed from foreign jurisdictions or raised locally on long-term basis and profiteer on the forex holdings.

“They also refuse their customers access to forex while bidding the naira to depreciate and exploit the market.”

He applauded the directive of the apex bank for the DMBs to immediately sell off the foreign currencies they were holding on the long term to zero level.

“It is estimated that between six billion and seven billion dollars is kept by banks in long positions either in cash or locked up in forex swaps deals. This truly captures the CBN’s capacity for regulatory oversight,” he said.

Akinsiju said that the new policy would provide incentives for diaspora funds to be channelled into the official market rather than the parallel market.

“The new policy translates to an incentive to International Money Transfer Operators to redirect forex to the official market rather than the hitherto practice of diversion to the black market.

“This will ultimately, rechannel more diaspora funds to the Nigeria forex market with possible enhancement of forecast liquidity. It will also ameliorate demand pressure with subsequent appreciation of the naira,” he said.

The CBN had initiated a number of policies to halt the free fall of the naira at the foreign exchange market.

One of such policies was contained in a circular, which mandated the DMBs to ensure that they do not surpass 20 per cent short (holding more foreign currency assets than liabilities).

It asked banks currently exceeding these prescribed limits to make adjustments to their positions to align with the new regulations by February 1.

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