CBN to intervene in FX market, lifts ban on 43 items

The Central Bank of Nigeria (CBN) says it will boost liquidity in the foreign exchange (FX) market by intervening “from time to time”.

The apex bank, in a statement issued on Thursday, said that as market liquidity improves, the interventions will “gradually decrease”.

The CBN also announced the lifting of the ban on 43 items previously restricted from accessing forex.

The decision comes amid high levels of volatility experienced in the FX market following the unification of all trading windows into the investors’ and exporters’ (I&E) window — the official FX market.

On Wednesday, the naira fell to a new all-time low, trading at N1,045 to the dollar in the street markets. The depreciation was sustained at the official market at N776.

In the statement, signed by Isa AbdulMumin, CBN’s director of corporate communications, the regulator pledged to continue to promote orderliness and professional conduct by all participants in the foreign exchange market to ensure market forces determine exchange rates on a willing buyer, willing seller principle.

“The CBN reiterates that the prevailing Foreign Exchange (FX) 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,” the statement reads.

“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.

“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 CBN is committed to accelerating efforts to clear the FX backlog with existing participants and will continue dialogue with stakeholders to address the issue.”

The apex bank said it has set the attainment of a single FX market as one of its goals.

The bank added that consultation is ongoing with market participants to achieve the goal.

Meanwhile, in 2015, the CBN restricted 43 items from accessing FX from I&E window.

Some of the affected items include rice, cement, margarine, palm kernel, palm oil products, vegetable oils, meat and processed meat products, vegetables and processed vegetable products, poultry, tomatoes/tomato paste, soap, cosmetics, and head pans.

The lifting of the ban means that importers of these items can now freely purchase forex from the official window at ‘cheaper rates’.