In a bid to address the persistent instability plaguing the Naira, the Central Bank of Nigeria (CBN) has issued two significant circulars within the past day, targeting both commercial banks and the public.
The first measure involves the removal of the allowable limit of exchange rates quoted by International Money Transfer operators. This move is anticipated to inject greater flexibility into the foreign exchange market, bolster FX inflows, attract Foreign Direct Investment (FDI), and mitigate activities in the parallel market.
Additionally, the CBN has introduced a harmonization of reporting requirements concerning banks’ foreign currency exposure. This step aims to enhance market accountability and transparency.
These directives represent the CBN’s efforts to foster transparency and enable the Naira to ascertain its authentic value. The removal of the exchange rate limit empowers market operators to quote rates based on prevailing market conditions, fostering a ‘willing seller, willing buyer’ dynamic. Meanwhile, the reporting harmonization serves as a monitoring mechanism to ensure banks accurately report their foreign currency transactions using a predetermined template.
Non-compliance with the stipulated reporting limits carries immediate consequences, including sanctions and potential suspension from participating in the foreign exchange market.
As Nigerians await further executive orders from the President aimed at enhancing the foreign exchange landscape, the CBN’s recent actions are anticipated to yield positive outcomes in the near term. The market eagerly anticipates the effects of these measures on Naira stability and overall economic resilience.