The Governor of the Central Bank of Nigeria (CBN) has stated that recent reforms of the apex bank are beginning to yield positive results concerning liquidity in the foreign exchange market.
Mr. Cardoso stated this during an appearance before the House of Representatives today saying that there has been an increase in dollar liquidity within the country’s currency market.
He stated,
- “As of yesterday, the volume of transactions in our market was over $800 million. This is the first time in many years it has achieved this level.
- “I want to emphasize that we are now at a turning point and bold reforms are underway across different segments of the economy. I’m confident that positive outcomes are already emerging and will become more apparent shortly.”
Over the past weeks, the naira has depreciated significantly against the dollar since January 26th. This decline follows measures taken by the central bank to align the official market value closer to the parallel market, as part of an ongoing effort to bridge the chasm between the rate at the NAFEM window and that of the parallel market.
Yesterday, the naira reached an intra-day high of N1526/$1 but closed at N1,419.86/$ on the NAFEM window.
Reforms of the CBN
- The scarcity of dollars in the domestic market has significantly contributed to the currency’s weakness. The central bank has been actively addressing this issue by urging Nigerians residing abroad to repatriate their funds through official channels, aiming to stabilize the currency.
- Part of the reforms the CBN has introduced includes clearing the backlog of forex obligations which Mr. Cardoso claims to have settled $2.3 billion remaining just $2.2 billion.
- Also, the apex bank has mooted plans to establish a singular foreign currency (FCY) gateway bank that will centralize all correspondent banking activities and provide incentives to individuals who hold foreign currencies outside the formal banking system.