Two days ago, the CBN released a new guideline for the long awaited FX market. The market, according to CBN will run as a single market and FX prices will solely be determined by forces of demand and supply.

Good one and I say kudos to CBN for this specifically for the tracking system introduced - Thomas Reuters and FMDQ platforms.

However, why keep the ban on the 41 items? Why the need for restrictions? I quite understand that CBN wants to introduce some discipline and also make Nigerians purchase made in Nigeria commodities but the ban on the items may not guarantee the single market CBN is proposing.

As long as dollar is available to one person, it will get to the reach of others including those who deal in the banned items. One pertinent thing to note is that since these people are denied access to dollars, they will be willing to pay a higher price for it anywhere else.

Therefore, if this market is not made a totally free market where anyone who has the ability to buy dollars at the market price is allowed to buy, those who are given access by CBN might buy dollars and sell at the black market at a higher rate. The rate then would not be totally controlled by the market but also by the additional external factors in the black market.

My view anyway and I strongly believe that only a free market can guarantee a long term solution to FX issues in Nigeria.

Chukwutobi:
Two days ago, the CBN released a new guideline for the long awaited FX market. The market, according to CBN will run as a single market and FX prices will solely be determined by forces of demand and supply.

Good one and I say kudos to CBN for this specifically for the tracking system introduced - Thomas Reuters and FMDQ platforms.

However, why keep the ban on the 41 items? Why the need for restrictions? I quite understand that CBN wants to introduce some discipline and also make Nigerians purchase made in Nigeria commodities but the ban on the items may not guarantee the single market CBN is proposing.

As long as dollar is available to one person, it will get to the reach of others including those who deal in the banned items. One pertinent thing to note is that since these people are denied access to dollars, they will be willing to pay a higher price for it anywhere else.

Therefore, if this market is not made a totally free market where anyone who has the ability to buy dollars at the market price is allowed to buy, those who are given access by CBN might buy dollars and sell at the black market at a higher rate. The rate then would not be totally controlled by the market but also by the additional external factors in the black market.

My view anyway and I strongly believe that only a free market can guarantee a long term solution to FX issues in Nigeria.

Please tell them. And where does the CBN intends to get $$ to supply?
Crude price is at its lowest
We currently export below our regular 2m barrels because of vandalism
We are import dependent, hence no balance of trade achieved.
The demand for $$ is dominated by the informal sector who won't have access to the said $$ from the bank, hence aboki cabal buys it all.
Our foreign reserves at 26bn$, how long can this last ?
We still import refined products

This is not the western world, I doubt it will work here.

sunboy:



Please tell them. And where does the CBN intends to get $$ to supply?
Crude price is at its lowest
We currently export below our regular 2m barrels because of vandalism
We are import dependent, hence no balance of trade achieved.
The demand for $$ is dominated by the informal sector who won't have access to the said $$ from the bank, hence aboki cabal buys it all.
Our foreign reserves at 26bn$, how long can this last ?
We still import refined products

This is not the western world, I doubt it will work here.

Thanks for your reply.
But the reason CBN decided to have a single market is clear. It's trying to prove to the international investment market that Nigeria has enough FX to settle investment proceeds.

For CBN to achieve this aim, he needs to ensure stable FX rates like it is in a free market system. The CBN also stated its willingness to intervene in the market when situation calls. But how long will this be? Why can't we have a free market once and for all and have a holistic view of the market.

Great news... CBN now admits BDCs into the FX market. Nice move.