CBN Partners With Minstry of Finance and NNPC on Forex Repatriation

It was recently announced by the governor of the Central Bank of Nigeria, Olayemi Cardoso as revealed that the apex bank, in close collaboration with the ministry of finance alongside NNPC, will work handily together to make sure that all forex inflows return to the Central Bank of Nigeria (CBN).

Mr Cardoso stated that the CBN will work on price discovery for the nation's local currency as it believes that the naira is currently "undervalued" and, coupled with coordinated measures on the fiscal side, the CBN will expedite genuine price discovery in the near term.

He also said that the CBN is working on clearing FX backlogs and will ensure that those who abuse the process are dealt with according to the provisions of the law.

The CBN head made this known yesterday while delivering his speech at the Nigerian Economic Summit Group's (NESG) 2024 Macroeconomic Outlook Report launch.

The CBN Governor's speech reads,

• The naira is currently undervalued, and coupled with coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term. This coordinated approach will contribute to a more balanced and stable exchange rate.

• With the Ministry of Finance and the NNPC to ensure that all FX inflows are returned to the Central Bank. This coordinated effort will significantly enhance the Bank's FX flows and contribute to the accretion of reserves.

• The CBN governor noted that the expected stability in the foreign exchange market for 2024 can be attributed to the reduction in petroleum product imports and the apex bank's recent implementation of a market-determined exchange rate policy.

• This reform is designed to streamline and unify multiple exchange rates, fostering transparency and reducing arbitrage opportunities. The resulting consistent and stable exchange rate will boost investor confidence and attract foreign investment, elevating Nigeria's appeal to global investors.

• We are implementing a comprehensive strategy to improve liquidity in our forex markets in the short, medium, and long term. Our focus is on addressing fundamental issues that have hindered the effective operation of our markets over the years.

• With the completion of an independent forensic review and the subsequent clearance of the backlog of valid forex transactions, we remain steadfast in our commitment to address any infractions and abuses decisively.

• To stabilise the exchange rate, we must prioritise transparency and create a market environment that enables the fair determination of exchange rates, ensuring stability for businesses and individuals alike.

Mr. Cardoso also said that the appropriate policy will provide a more balanced and stable exchange rate, emphasising that the administration will prioritise transparency and create a market environment that enables the fair determination of exchange rates, ensuring stability for businesses and individuals alike.

"This reform is designed to streamline and unify multiple exchange rates, foster transparency, and reduce arbitrage opportunities. The resulting consistent and stable exchange rate will boost investor confidence and attract foreign investment, elevating Nigeria's appeal to global investors," he said.

How Naira Traded Yesterday 

The value of the naira has continued to decline at both the official and parallel ends of the market, with the currency trading as low as N1,330 to the dollar at the Nigeria Autonomous Foreign Exchange (NAFEX) window. At the same time, it sells on the streets for N1,365 to the dollar. On Tuesday, Naira showed resilience against the dollar in the official foreign exchange market to close higher at 5.1% or N878.61/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEM).