Babatunji Wusu –
The Central Bank of Nigeria (CBN), led by Governor Yemi Cardoso, has adopted a number of policies and reforms aimed at stabilising the naira and restoring the local currency’s fair value.
The top bank’s latest sequence of actions to stem the naira’s wild decline have continued to produce the desired results.
The efforts have resulted in a comeback of the local currency from 1,900/dollar in late February to around 1,200/dollar on Tuesday in the parallel market.
The primary reforms include unifying exchange rate windows, liberalizing the foreign exchange market, and clearing FX backlog responsibilities for banks and airlines.
Others include the establishment of a Price Verification System, the enforcement of limits on banks’ Net Open Positions, the elimination of the N2 billion daily cap on the remunerable Standing Deposit Facility, and the overhaul of the Bureau De Change section.
The following is a list of the CBN’s important reforms.
In March, in an effort to correct anomalies in Nigeria’s retail foreign currency market and close the expanding exchange rate difference, FX sales to BDC operators began at reduced rates.
The central bank sold $10,000 to BDCs at a rate of N1,251/$ and instructed the BDCs to sell to qualifying consumers at a rate no higher than 1.5 percent above the purchase price (N1,269/$1).
In April, it sold $10,000 to each BDC for N1101/$ and instructed the operators to sell at a spread of no more than 1.5 percent above the CBN rate. It also directed all qualifying BDCs to start paying naira deposits into designated CBN accounts on April 8, 2024.
The CBN’s activities also include looking into entities whose conduct it believes are hurting the Tinubu administration’s economic reform initiatives.
In late March, Cardoso stated that security agencies, including the Economic and Financial Crimes Commission, were looking into suspicious foreign exchange allocations and forward contracts valued at $2.4 billion.
The new CBN government has hired a multinational firm, Deloitte, to conduct an audit of the $7 billion debts. Cardoso has previously stated that approximately $2.4 billion FX allocations from the $7 billion backlog were invalid.
The news came as two executives from the global cryptocurrency trading platform Binance were detained and are being probed for tax evasion and other crimes.
On April 8, 2024, the CBN advised all Nigerian banks to stop using foreign currency as collateral for naira loans within 90 days. This was stated in a circular titled “The use of foreign-currency-denominated collaterals for naira loans” with the reference number BSD/DIR/PUB/LAB/017/004.
