The Central Bank of Nigeria is expected to announce details of its new foreign exchange policy sometime this week according to reports from Bloomberg Media. Investors, analysts and followers of the Nigerian economy have been in limbo since the CBN announced weeks ago that it was going to adopt a new flexible exchange rate policy.
Bloomberg is now reporting that an announcement is imminent quoting sources who were part of a meeting the CBN held with commercial banks.
The Central Bank of Nigeria is close to unveiling a new foreign-exchange policy and an announcement could come as soon as this week, according to a person who attended a meeting between Governor Godwin Emefiele and bankers.
The regulator will probably move to a dual exchange-rate system and make an announcement in a circular to banks, said the person, who asked not to be identified as the talks were private.
While the central bank is still working out details, it is considering a trading band around a new, weaker interbank rate, said the person, who attended the meeting on June 9 in the capital, Abuja. It may also reinstate a minimum holding period for foreign investors buying naira bonds, they said.
As we await details we have received conflicting reports about what policy the CBN is going to adopt. While most expect a free float of the Naira others believe it appears the CBN might be going for a WDAS where the official window is kept open for select transactions and the rest of the market is sent to the interbank market.
Anything short of a market driven exchange rate policy is bound to hurt the Naira even more as foreign investors know that a devaluation of the Naira might only be temporary as more will be required if the economy remains downbeat. Analysts also opine that the bankers have requested that the CBN clear out the backlogs of dollar demands currently waiting to be filled from the official window before introducing any new policy. It is believed that this will usher in a new market on a clean slate as leaving the interbank to clear this backlog could cause massive volatility.
Nairametrics Founder, @Ugodre was on daily business show, Business Express where he mentioned that an announcement was imminent this week considering the pressure the government was on.