CEM REPORT, FINANCE | President Bola Ahmed Tinubu-led administration itemized monetary policy reform as a top priority to get the nation’s economy on an upward track. The strength of the naira against major currencies (FX) especially the dollar has been a burning national issue turning the scrutiny eyes of Nigerians to the action of the Finance Ministry and the CBN.
To ease the continuous pressure on the naira, the Central Bank of Nigeria (CBN) has ended the eight-year ban on 43 items restricted from accessing forex (FX) on the official market. In a press statement signed by its Director of Corporate Communications, Isa Abdulmumin, the CBN hopes that this decision will help in achieving a unified exchange rate.
“Importers of all the 43 items previously restricted by the 2015 Circular referenced TED/FEM/FPC/GEN/01/010 and its addendums are now allowed to purchase foreign exchange in the Nigerian Foreign Exchange Market.”
The ban, which covered items such as rice, cement and poultry, was imposed as part of the unorthodox policies under former central bank Governor Godwin Emefiele to prop up the naira currency. In 2015 when the ban was imposed, Emefiele also said it would help conserve foreign reserves, facilitate the resuscitation of domestic industries and improve employment generation.
However, the reverse was the case as it birth a steady increase in prices of the items consequently increasing the cost of living as importers were forced to use the black market to bring in their goods. Domestic industries were also sent packing as many could not access funds to import the raw materials they needed to produce.
Also, the CBN under its new leadership Oluyemi Cardoso, has reaffirmed its commitment to a single FX market noting that consultation is ongoing with market participants to achieve this goal. He continued that the apex bank plans to boost liquidity in the FX market via interventions noting that available mechanisms are been explored to address forex rate unification under a willing buyer and willing seller arrangement.
“As part of its responsibility to ensure price stability, the CBN will boost liquidity in the Nigerian Foreign Exchange Market by interventions from time to time.
“As market liquidity improves, these CBN interventions will gradually decrease.”
The apex bank stated that it will continue to promote orderliness and professional conduct by all participants in the Nigerian Foreign Exchange Market to ensure market forces determine exchange rates on a Willing Buyer – Willing Seller principle.
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It however cautioned that the prevailing Foreign Exchange rates should be referenced from platforms such as the CBN website, FMDQ, and other recognised or appointed trading systems to promote price discovery, transparency, and credibility in the FX rates.
Nigeria has continued to race against market forces of demand and supply as regards the shortage of FX (dollar) at the official market which has weakened the naira that the parallel market due to speculation and excess demand. This has further widened the gap between the parallel market rate and the official rate.
Since June when trading restrictions were lifted on naira, it has lost over 40 per cent of value against the dollar.
List of 43 items readmitted to the official market
Palm oil products
Meat and processed meat products
Vegetables and processed vegetable products
Poultry and processed poultry products
Tinned fish in sauce (Geisha)/sardine
Cold-rolled steel sheets
Galvanized steel sheets
Metal boxes and containers
Wire rods (deformed and not deformed)
Security and razor fencing and poles
Wood particle boards and panels
Wood fiberboards and panels
Plywood boards and panels
Glass and glassware
Tiles-vitrified and ceramic
Plastic and rubber products
Cellophane wrappers and bags
Soap and cosmetics
Eurobond/foreign currency bond/ share purchases