A recent comment by the Governor of the Central Bank of Nigeria, Godwin Emefiele, caused sparked a shock in the financial services sectors with regard to the forex market.
While speaking at the special press briefing at the end of the 364th Bankers’ Committee meeting on the launch of the bank’s new forex repatriation scheme ‘RT200 FX Programme’ on Thursday, February 10, 2022, at its headquarters in Abuja, Mr Emefiele indicated that the CBN may discontinue the sale of forex to Deposit Money Banks by the end of the year.
Emefiele had stated that banks must begin to source their forex from the export proceeds market, where they may match their import demands with export proceeds, insisting the decision was in accordance with the CBN’s commitment to increase the country’s foreign reserves through non-oil export profits.
Through the ensuing reactions, Nairametrics decided to reach out to a senior CBN executive who was present at the briefing to get further clarification about the comment.
Surprisingly, the official clarified that the Governor was only describing a hypothetical situation that would have been perfect if banks had concentrated more on export proceeds as a source of currency rather than entirely on the CBN.
“The CBN is an institution and does not make policy based on verbal responses to a question. The Governor was only responding to a question and was painting a hypothetical scenario. So, there are no plans to stop the sale of forex to banks this year. Such plans are usually well-crafted policies that go through several consultations especially with banks before they are even made public. Recall, we just got out of a meeting with top bank executives where several presentations were made by several committees and nowhere was the issue of stopping the sale of forex to banks discussed,” the CBN official said.
Regardless, the idea of the policy has been brought forward by the CBN boss himself and it would only be imperative to explore the possibility of what could happen if the CBN stopped the sale of dollars to banks.
What the experts are saying
Dr. Muda Yusuf, CEO Of Central of promotion of private enterprise stated that if the CBN stops the sale of dollars to banks the effects would be profound and possibly unbearable.
He said, “If the CBN stops sales of forex to the banks, the shocks on the economy would be very profound and possibly unbearable. To attract foreign exchange from other sources, the CBN needs to ensure that the rates at the Importers and Exporters window are market reflective and flexible. The significance of the FDIs and FPIs and diaspora inflows should not be diminished.”
Yusuf also stated that the time for CBN to have hands-off approach is not advisably now. He said “The CBN is currently the custodian of the major forex supplies from crude oil sales. Therefore, there should be a…