The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has explained why the Naira has been relatively stable at the Investors and Exporters (I&E) window.
Emefiele attributed that to the discontinuation of forex allocation to Bureau De Change (BDC) operators, the apex bank’s demand management policy as well as the convergence between the CBN and NAFEX rates.
This was made known by Emefiele at the 32nd Seminar organised by the CBN, for Finance Correspondents and Business Editors, on Thursday in Akure, Ondo.
Emefiele was represented by the CBN’s Deputy Governor for Corporate Services, Mr Edward Adamu, who delivered his message virtually at the seminar which has, “Exchange Rate Management and Economic Diversification in Nigeria: The ‘PAVE’ Option,” as the theme.
What the CBN Governor is saying
Emefiele in his statement said, “As a result of our demand management policy, the naira has remained largely stable at the I & E window, particularly since the discontinuation of FX allocation to Bureau De Change operators along with the convergence between the CBN and NAFEX rates.
”Banks are now able to meet the demands of their customers seeking forex for SMEs, school fees, medical and PTAs.’’
The CBN boss said that the Bank established an Investors and Exporters Window (I&E) to allow for purchase and sale of forex at prevailing market rate, adding that in 2021, the naira maintained relative stability at N411.50/ US$ in August but depreciated to N414.33/US$ in Dec. 2021.
The exchange rate stood at N416.98/$1 as of February 2022
Other measures taken by CBN to achieve stability at the 1&E window
- According to NAN, Emefiele also listed other measures taken by the CBN that had yielded results to include partnership with commercial banks to go after Nigerians who falsely bought dollars under the pretence of travelling abroad and ended up round-tripping.
- He said, “The Central Bank of Nigeria had also sanctioned Bureau De Change (BDC) operators for illegal forex trading and discontinued the sale of forex to the Bureau operators in Nigeria.
- “In addition, licensing of new BDCs was suspended. The CBN also introduced the ‘Naira 4 Dollar Scheme’ to encourage diaspora remittances.”
- He said that remittance inflows had been supported by the ‘Naira for Dollar’ scheme, and there had been a surge in the inflows.
- The CBN boss noted that these policies are yielding positive results in terms of meeting genuine demand for foreign exchange and exchange rate stability.
What you should know
- Recall that in July 2021, Emefiele announced the discontinuation of the sale of forex to BDC operators for illegal forex trading and for engaging in unwholesome and other illegal practices as well as being agents that facilitate money laundering, graft and corruption in the country.
