Emmanuel OchayiThe naira edged up slightly against the US dollar, closing at N1,498.25/$ on Thursday, showing a marginal improvement from the previous day’s rate of N1,503.38/$.
This minor appreciation occurred amidst ongoing efforts by the Central Bank of Nigeria (CBN) to combat foreign exchange malpractices.
In response to the persistent challenges in the forex market, the CBN issued a series of circulars on February 14, 2024. These directives aimed at curbing sharp practices among financial service operators and forex racketeers.
Addressing the concerning trend, a CBN official stated: “We are committed to ensuring transparency and stability in the foreign exchange market. Our measures are designed to prevent malpractices and safeguard the integrity of the system.”
One of the key directives prohibits banks from disbursing Personal Travel Allowance (PTA) in cash, mandating electronic payments instead. Additionally, International Oil Companies (IOCs) were instructed to stagger the repatriation of their revenue, mitigating liquidity disruptions in the domestic forex market.
Despite these regulatory efforts, the naira’s performance remains a concern. The official exchange rate hovered around N1,500/$, indicating persistent pressure on the currency.
Parallel market rates surged to N1,600/$, reflecting heightened demand for foreign currency.
Expressing dismay, a Bureau De Change operator lamented, “The continuous depreciation of the naira is troubling. We are witnessing increased uncertainty, leading to higher exchange rates.”
Economists had previously warned of the naira’s vulnerability, with projections suggesting a further decline.
John David, a financial expert, cautioned: “We may see the naira depreciate further, potentially reaching N1,500/$ in 2024.”
The widening gap between official and parallel market rates underscores the complexity of the forex landscape. Despite CBN interventions, challenges persist, undermining exchange rate stability.
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In response to global inflationary pressures, the CBN adjusted allowable price deviations for exports and imports. These measures aim to enhance market efficiency while curbing over-invoicing and under-invoicing practices.
As the CBN intensifies efforts to address forex challenges, stakeholders emphasize the need for sustained reforms to restore confidence in the naira and ensure macroeconomic stability.
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
