Speculators resisting CBN reforms on FX market, says FG

The federal government says the efforts of the Central Bank of Nigeria (CBN) to reform the foreign exchange (FX) market have been met with ferocious resistance from speculators and other unscrupulous players.

Mohammed Idris, minister of information and national orientation, made this known in a statement on Friday.

CBN has implemented several policies to strengthen the naira, including the unification of all segments of the official forex market on June 14, 2023.

Also, on February 1, 2024, the apex bank announced it has removed the allowable limit of exchange rate quoted by the international money transfer operators (IMTOs) to boost liquidity through the willing seller, willing buyer model.

Another policy implemented by the CBN is the limit placed on the repatriation of proceeds by international oil companies due to its impact on FX liquidity.

The minister said the government is not under any illusion that the policy moves are silver bullets, or that nothing extra is required.

“We understand that these are foundational fiscal and monetary policy moves, upon which we must now build the superstructure of true economic growth and prosperity,” Idris said. 

“As respected economists and experts have acknowledged, these foundational reforms will be difficult and painful for Nigerians in the short-term. 

“At the same time, there is the consensus that they are inevitable, given just how much they have held back robust and lasting economic growth. 

“The problems that we are solving are no doubt multifaceted, intertwined, and deep-rooted, requiring creative, strategic, decisive, and multi-pronged solutions.”

He said the bold moves being implemented are in full alignment with what is required. 

“The CBN has been proactive, initiating a comprehensive strategy to enhance liquidity in the forex market,” Idris said. 

“In addition to unifying the rates, the bank has also cleared a significant amount of outstanding Forex obligations, and outlined new operational mechanisms for commercial banks, Bureau De Change (BDC) operators and International Money Transfer Operators (IMTOs).

“It is heartwarming to note that we are starting to see the results. Indeed, the naira is stabilizing, and the foreign exchange market is seeing a surge of inflows.

“The latest NBS figures show that capital importation into Nigeria rose by over 66 percent in Q4 2023, compared with the preceding quarter.

“The CBN Governor has also highlighted the fact that $1.8 billion flowed into the forex market last week, on the back of the new reforms.”

“Sadly, as with any effort to reform and sanitise a system entrenched in long-term malpractice, the CBN’s efforts have been met with ferocious resistance from speculators and other unscrupulous players within and outside our country, who profit from dysfunction and opacity.”

To combat this, he said government regulatory and enforcement agencies have been working around the clock in recent days, joining forces to address these efforts to undermine the reforms.

Idris said the strategic alliance resulted in intelligence-led identification, investigation and sanctioning of individuals as well as organisations involved in illegal activities and sabotage within the forex market. 

“Relevant regulatory and security agencies have been directed to remain vigilant to ensure that malpractices capable of undermining our currency are averted and that those engaged in these acts are brought to book. The government will not allow its efforts to be jeopardised,” he said

‘EMERGING STABILITY OF NAIRA IN INTEREST OF ALL NIGERIANS’ 

Idris said the emerging stability of the naira is in the interest of all Nigerians and more steps will be taken to stabilise the currency.

“Nigerians should rest assured that the government will continue to take further steps to stabilize the naira and safeguard our economy,” he said. 

“We will continue to seek the patience and understanding of Nigerians as we push through these difficult times, into a season of abundant benefits and truly renewed Hope.”

Idris said the current challenges the country is facing are only temporary, and, collectively, they will be surmounted.