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CBN yields to pressure, modifies forex policy (Updated)

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CBN yields to pressure, modifies forex policy

In its latest attempt at shoring up the dwindling fortune of Nigerian currency, the naira, the Central Bank of Nigeria (CBN) on Monday announced a new foreign exchange policy with immediate effect.

According to CBN spokesman, Mr. Isaac Okoroafor, though more details of the workability of the new policy would be released with time, it is to assist individuals obtain dollar with even higher value from its interbank rates exchange.

But as it is, the policy directs banks to use the new window to assist their customers have currencies for private purchases, medical and school fees needs on a special rate not exceedding 20 per cent of a prevailing rate at the interbank rate.

This is to essentially assist in reducing the pressure forex demand is having on the naira.

The apex bank, was on Thursday criticised by the National Economic Council for the unprecedented instability that has visited naira in the past one year, leading to its loss of over 200 per cent exchange value from what it was before 2016.

The CBN, has experimented varied policy options to stabilise the Naira without concrete results.

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Said Okoroafor, while throwing more light on the development: “CBN with the new mearsure will ease the difficulties encountered by Nigerians, who sincerely need foreign currency to meet their personal needs, including their business travels, medical and school fees.”

It was learnt that to avoid abuse, genuine requests for such assistance will have their banks provide forex need with payment of such retail transactions as if their banks are rendering usual banking services, with the agreed rate.

But Mr. Lukas Lulubi, a financial analyst with Rubicon Company, a Lagos-based consulting firm, said the solution in salvaging naira lies in having enough dollar pumped into the economy.

“In the situation where foreign investors are reluctant to come in, the best option is to allow naira exchange rate be driven by the market forces. If that is done the exchange rate will rise, but with the next stage being factoring policies in place to control consumption of luxury goods, through introduction of higher taxes on them, the rate will normalise,” he said.

Another expert, Mr Henry Moyo described any measure outside government divesting itself from business as parliative with limited result.

He said the time to allow professionals manage the key aspects of the economy is now.

It would be recalled the IMF had in February 2016 recommended a total devaluation of naira for Nigeria to have earlier exit from its recession, but the government is still footdragging on that.

As at Monday, a dollar exchanged for N520 at the parallel market, and N350 at the interbank market.

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0 Comments

  1. Balarabe musa

    February 21, 2017 at 9:16 am

    It is better they start selling these hard currencies in the bank at the real exchange rate because the rate at which dollar is rising against naira, if care is not taken, will shock us when a dollar is exchanged for #1000.

    • seyi jelili

      February 21, 2017 at 10:46 am

      You have just offer the best solution to the flunctuating exchange rate of a thing.
      Scrap bureau De Change, make commercial banks sell dollars to its users, with that, there won’t be illegal dealing anymore. I know not why it is difficult for them to scrap the bureau de change.

    • Joy Madu

      February 21, 2017 at 9:11 pm

      True talk our banks should take over because with there support dollar will come down to the normal rate

  2. Roland Uchendu Pele

    February 21, 2017 at 9:20 am

    So, Banks will now have retail outlets in major Airports for forex – this is a welcome idea. The Bureau de Change guys will face the highest level of competition now, as they will no longer be the masters of the game.

    The parallel market exchange rate is just disheartening abeg!

    • Margret Dickson

      February 21, 2017 at 9:42 am

      This new policy is also subject to error. It won’t become tested okay until it successfully achieved its purpose. If it fails, CBN will have to bring out another policy, I hope it will be a success.

  3. Animashaun Ayodeji

    February 21, 2017 at 9:50 am

    The Central Bank ought to have done this before now, when a policy isn’t working, the governor is expected to authorize another until they get the best policy that will get the country’s FOREX in good shape. He waited too long

    • JOHNSON PETER

      February 21, 2017 at 4:18 pm

      Emefiele is not capable. I want osinbajo to quickly grab this opportunity to weed out all unproductive people in the government especially emefiele

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