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The Nigerian government has announced plans to automate transactions in the entire foreign exchange market in order to close wide arbitrage and punish naira speculators.
This is towards ensuring that all dealings in the foreign exchange (forex) market – from the official to the parallel market where huge arbitrage consistently occurs – would be thoroughly monitored in order for offenders to be fished out and punished.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, disclosed this during the first-panel session at the 29th Nigeria Economic Summit (#NES29), the day that the US dollar exchanged for N1210 to the Naira in the street market.
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He admitted that Nigeria’s foreign exchange market was not functioning effectively due to illiquidity, saying that the government was prepared to do everything required to change the status quo.
Prime Business Africa reports that to get one’s fingers burnt means to suffer unpleasant results of an action, especially loss of money, so that they do not want to do the same thing again. This is as the Central Bank of Nigeria (CBN) vowed to take its objective of price stability “very seriously indeed.”
Minister Edun’s comment came shortly after President Bola Tinubu had told the gathering that he has taken steps to deal with liquidity in the foreign exchange market and made a commitment to sort out all backlog.
Edun further disclosed that the President signed two executive orders last week: “One of them is an executive order that allows forbearance for all the cash in the economy to come in and formally boost the money supply legally.
“There’s another executive order that allows domestic issuance of foreign currency issues so that it will allow incentive to provide that foreign exchange for whatever source.”
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He said alongside this and part of a broader sort of review, there is a revamping of the foreign exchange market, which he said will be unfolded as time goes.
“Foreign exchange market will be simplified and reformed such that all legal and legitimate transactions will fall within the purview of the authorities and in the formal foreign exchange market. Anything outside that will be illegal, a criminal offence and will be punished,” he added.
Also speaking at the #NES29, the CBN Governor, Yemi Cardoso, assured that the apex bank will henceforth take its objective of price stability “very seriously indeed”.
He said the plan is to have a foreign exchange market that is fit for purpose and works for everybody, which can be predictable and with no opacity, assuring that “We are going to come out with an elegant document that will tell you the rules.”
