Abuja, Feb. 5, 2024: The Independent Media and Policy Initiative (IMPI), says the new policies introduced by the Central Bank of Nigeria (CBN) will help stabilise the Naira in the foreign exchange market.
Mr Niyi Akinsiju, the Chairman of the Non-Governmental Organisation (NGO), said this in a statement on Sunday in Abuja.
Akinsiju said that the polices would stem the volatility in the forex market and also sanitise the banking sector.
He said that the new move was a reflection of the commitment of the new CBN management to check the excesses of banks “gaming” the system.
“The prudential guidelines as issued by the CBN, unveils the gaming of the foreign exchange market by Nigeria Deposit Money Banks (DMBs).
“The DMBs hoard the forex they had either borrowed from foreign jurisdictions or raised locally on long term basis and profiteer on the forex holdings.
“They also refuse their customers access to forex while bidding the Naira to depreciate and exploit the market” he said.
He applauded the directive of the apex bank for the DMBs to immediately sell off the foreign currencies they were holding on the long term to zero level.
“It is estimated that between six billion and seven billion dollars is kept by banks in long positions either in cash or locked up in forex swaps deals.
” This truly captures the CBN’s capacity for regulatory oversight,” he said.
Akinsiju said that the new policy would provide incentives for diaspora funds to be channelled into the official market rather than the parallel market.
“The new policy translates to an incentive to International Money Transfer Operators (IMTOs) to redirect forex to the official market rather than the hitherto practice of diversion to the black market.
“This will, ultimately, rechannel more diaspora funds to the Nigeria forex market with possible enhancement of forecast liquidity.
“It will also ameliorate demand pressure with subsequent appreciation of the Naira,” he said.
CBN had initiated a number of policies to halt the free fall of the Naira at the foreign exchange market.
One of such policies was contained in a circular which mandated the DMBs to ensure that they do not surpass 20 per cent short (holding more foreign currency assets than liabilities).
It asked banks currently exceeding these prescribed limits to make adjustments to their positions to align with the new regulations by Feb. 1.
