The Central Bank of Nigeria (CBN) is set to investigate and impose sanctions on Deposit Money Banks (DMBs) suspected of undermining efforts to stabilize the Naira and bolster the national currency. Recent reports have revealed that some banks are engaging in speculative activities, purchasing foreign currency from the Investors & Export window and subsequently selling it at a profit in the parallel market.
Anonymous sources, including a Bureau De Change (BDC) operator, have confirmed that banks are stockpiling dollars to maximize their profits, a practice that has contributed to the challenges faced in achieving the Federal Government’s goal of unifying exchange markets. Speculative actions, combined with hoarding, have resulted in artificial demand driving up foreign exchange rates, which is at odds with the CBN’s objectives.
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In response, the CBN is planning to take comprehensive measures to address these issues, including imposing heavy sanctions on banks and BDC operators that fail to comply. The government, with the support of international bodies like the World Bank and the International Monetary Fund (IMF), aims to implement these measures in pursuit of a unified exchange rate while ensuring the stability and strength of the Naira.
Economists anticipate that the removal of forex restrictions on 43 items by the CBN will lead to a potential appreciation of the Naira against the dollar in the coming days. This change will reduce the necessity for importers of previously banned products to resort to the parallel market, thus alleviating pressure on the Naira.
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To further stabilize the Naira, the Association of Bureau de Change Operators (ABCON) has instructed its members not to purchase dollars for more than N900 from Nigerians in the black market. This move is expected to support the Naira’s recovery from its previous depreciation.
Abdullahi Yusuf, CEO of AYA Modo Nigeria Limited, confirmed plans to peg the dollar-to-Naira exchange rate below N1,000 in the black market. Aminu Gwadabe, president of ABCON, emphasized their willingness to cooperate with CBN policies aimed at stabilizing the Naira and facilitating BDCs’ role in regulating the parallel market.
The CBN’s directives are anticipated to ensure the Naira’s stability and promote a commercially viable sector, contributing to a more robust exchange rate environment.
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