Rewane lauds CBN’s discontinuation of FX price verification system, says market will be stable

Bismarck Rewane, chief executive officer of Financial Derivatives, says the discontinuation of the price verification system (PVS) portal shows that the Central Bank of Nigeria (CBN) has achieved its purpose. 

Rewane spoke on Thursday during Channels Television’s ‘Business Morning’ show.

On June 26, the CBN announced the discontinuation of FX PVS portal used by importers.

This came almost one year after the apex bank introduced the portal the validation of all Form M applications.

The ‘Form M’ is a document used to declare the intention to import physical goods into Nigeria.

During the interview, Rewane said the discontinuation of the portal by the CBN is a testament that the country’s FX rates harmonisation has yielded results.

He also said there is no longer an incentive for Nigeria’s FX players to roundtrip foreign currency because the difference at both markets is marginal.

The economist also said the unification of the official and parallel FX markets rates is successful.

“… it makes sense to over-invoice imports and under-invoice exports, now there is no fear of that because the difference between the official market and parallel is N10-N15, and there is no incentive for round tripping,” he said.

“By removing the price verification system document, you are making it easier for goods to come into Nigeria. It is a good move.

“What the Central Bank of Nigeria is saying in essence is that there is no incentive for arbitrages as long as the price differences at the two markets are narrow.

“As a matter of fact, to all intents and purposes, we can say there is exchange rate unification in Nigeria today (Thursday).

“There is one rate because the difference between one and the other is marginal. It is an efficient move; it makes the market more transparent.

“As time goes on, this difference will narrow to almost zero. It is good news for the foreign exchange market. I think we will see some stability in the market now.”

On June 14, CBN announced the unification of all segments of the FX market.

The policy led to the collapse of all FX windows into the investors and exporters (I&E) window.

It also caused a significant devaluation of the naira, and serious fluctuations in the market.

However, Nigeria’s FX market has witnessed stability in recent weeks with marginal FX rates gap observed in the parallel and official markets.