IMF urges CBN to review forex policy

Written by on October 12, 2015

The Director, African Department of International Monetary Fund, IMF, Ms Antoinette Sayer, has said that measures put in place by the Central Bank of Nigeria, CBN, to restrict access to foreign exchange, forex, needed to be reviewed. she said this in respect tofurther widening of the parallel market margin in  foreign exchange market records 081014F-CBN-logo

While CBN forex trading window had exchange rate stabled at N197/US $1 last week, pressure however continued to mount at the parallel market, as the Naira depreciated from N224/ US $1 to N2250/US $1 during the week, sustaining the slide for the third week consecutively, thereby widening the exchange gap between the CBN official window and the parallel market.

The gap, according to market analysts, underscores market inefficiency

The depreciation in the value of the Naira in the parallel market has continually been attributed to insufficient supply of the foreign currency in the market. Market operators say “barring any major pronouncement from CBN this week, we expect rate to trade within the current band.”CBN had removed 41 items from access to its foreign exchange window on grounds that they could easily be produced in Nigeria rather than spend the country’s reserves on importing them.

In the interactive session with the media, she said: “The central bank has introduced administrative measures that limit access to foreign exchange and ban certain imports as a way of restricting the demand for foreign exchange.Those are measures that are quite detrimental, we think. It has certainly led to a lot of unhappiness in the private sector, as far as we’ve been aware, and understand that private investors see this as very detrimental to their economic activities.

 


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