The Central Bank of Nigeria (CBN) has cleared the existing foreign exchange demand to allow the naira effectively reflect market realities intended in the new foreign exchange regime.
CBN, through a Special Secondary Market Intervention Sales (SMIS), intervened in the forex market and cleared a forex demand backlog of $4.02bn through spot and forward sales.
Isaac Okorafor, the bank’s spokesman, said in Abuja that the bank’s intervention in the market was in line with its desire to promote a transparent, liquid and efficient market, and in order to engender market confidence and ensure credible price formation.
According to him, the move served in no small way to stimulate price discovery, with the determination of a marginal rate of $1/N280 through the special SMIS process.
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“With the development, the FX demand backlog has now been cleared and behind us for good” he said.
Okorafor added that the CBN was resolutely committed to making the Nigerian foreign exchange market globally competitive, credible, transparent, liquid, and efficient.
He expressed the bank’s gratitude to the market participants that collaborated in their conduct to achieving the desires of the CBN.
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He described the successful commencement of the autonomous/interbank FX market development as a major milestone in the history of the nation’s FX market.
With what transpired on the first day of the new forex regime, Okorafor said the CBN had successfully achieved some objectives including the clearing the FX demand backlog, performing its role as strictly a market intervention participant; and re-launching a functioning and efficient inter-bank market.
Okorafor expressed confidence that the Nigerian FX market would indeed flourish as it positions itself for global competitiveness.
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