FINANCIAL analysts have told the Central Bank of Nigeria to move beyond the stoppage of sales of dollars to the Bureau De Change Operators, BDCs and sustain reforms that address price distortions in the Nigerian foreign exchange market.
They further called on the Central Bank to ensure a market-driven price that ensures a stable exchange rate regime and encourages investments into the Nigerian economy.

The Central Bank of Nigerian governor Godwin Emefiele has at the last Monetary Policy meeting directed suspension of dollar sales to the BDCs in the country citing concerns of the graft and illegal transactions in their operations, as a key reason.

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The directive from the apex bank has seen the naira adjust firmly against the dollar, which analysts attributed to the policy on forex restrictions to the BDCS, but insisted it is not a long term solution to the FX crisis in the country.

“The gains were largely an adjustment for the initial shocks from policy forex restrictions to the BDCs.But rates are likely to remain above the pre restriction levels. It may not be appropriate to describe the correction as progress,’ An economist and former director-general of Lagos Chamber of Commerce and Industry Muda Yusuf told THE ICIR.

He said: “For normalcy to be restored, the pricing driven distortions must be corrected. The huge premium between the official retail exchange rate and the open market rates would continue to perpetuate roundtripping and other forms of distortions.

He noted that there would be enormous demand pressure on the banks which will ultimately pose a profound corruption risk, stressing that a market solution appears to be the sustainable solution.

Recall, the World Bank had in June in its report on economic development raised exchange rate management as the first of six policy areas where it was advising the Nigerian authorities to take action within three to six months.

The global bank in the report called on the authorities to provide a clearer and more predictable foreign exchange management system suggesting that its response to Abuja’s request for a $1.5 billion loan would be linked to how the issue was handled.

READ MORE HERE: https://www.icirnigeria.org/how-cbn-can-sustain-fx-gains-experts/