FG to implement new FX regulations to strengthen naira’s value by December
By Sodiq Adelakun
The federal government is set to implement new regulations in the forex market with the goal of strengthening the value of the naira and curbing illegal currency trading, according to a Bloomberg report quoting a senior government official.
As per a Bloomberg report, the proposed measures will involve broadening the official market to accommodate all lawful transactions while preventing the black market from accessing currency supply.
The new rule will include expanding the official market to accept all legitimate transactions and ensuring the “illicit” black market does not get supply.
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr Taiwo Oyedele said, “We think all of that will happen before December, and maybe in a matter of a couple of weeks we will begin to see the results, such that before the end of the calendar year, naira should find its true value, not the one that is being done currently in the parallel market.”
He also explained in an interview that the federal government’s plans include clearing the backlog of foreign exchange demand estimated at almost $7 billion, establishing transparent guidelines in the FX market and increasing liquidity in the naira forward market.
The naira has lost around 40 percent of its value since the Central Bank devalued it in June through the unification of the foreign exchange market.
While the policy was geared towards attracting more liquidity, things haven’t gone on as planned.
The naira traded at N993 to the USD in the NAFEM yesterday and in the past week, it has traded at almost N1,300 in the parallel market. This brought the chasm between the official window and the parallel market to around 40%.
During the Nigeria Economic Summit last week, Finance Minister Wale Edun said the federal government is expecting around $10 billion in forex inflows in a few weeks and President Tinubu will sign two executive orders aimed at reversing the flow of FX from the official window to the parallel market.
The orders are in the process of being gazetted according to Mr Edun.
