The acting Governor of the Central Bank of Nigeria (CBN), Folashodun Shonubi, has revealed that the official foreign exchange market, otherwise known as the Investors and Exporters (I&E) window, will be renamed the Nigerian Foreign Exchange Market (NFEM).
This was made known by the acting Governor of CBN, Folashodun Shonubi, while delivering a Distinguished Personality lecture titled: “Diaspora Remittances and Nigeria Economic Development” for members of the Executive Intelligence Management Course (EIMC) 16 at the National Institute for Security Studies, Abuja.
This is coming barely 2 months after the apex bank confirmed the abolishment of segmentation in the foreign exchange market and then collapsed all segments and rates into the I&E window, which it now regards as the sole official forex market.
The I&E window, which was established by the CBN in 2017, is the market trading segment for investors, exporters and end-users that allows for forex trades to be made at exchange rates determined based on prevailing market circumstances, thus ensuring efficient and effective price discovery in the Nigerian foreign exchange market.
What the acting CBN Governor is saying
- Shonubi said, “We will rename the foreign exchange market, known as the I & E market, to the Nigerian Foreign Exchange Market, as it is the sole market we acknowledge.”
The planned action by the CBN is coming at a time the crisis in the foreign exchange market has persisted with the naira crashing to a record low of N955/$1 at the parallel market with the I&E window trading at N781.34/$1 as the liquidity crisis in the market worsens.
The CBN boss had hinted that the apex bank will sanction commercial banks engaging in illegal sales of forex, adding that a commission had been formed to pay unscheduled visits to banks accused of unlawfully selling dollars.
He noted that despite efforts to induce individuals to engage in formal market transactions by granting a N5 refund through its Naira 4 Dollar scheme, the policy was still ineffective prompting the N5 rebate to be discontinued.
He, however, still acknowledged the usefulness of incentives in attracting people to the formal market.
Diaspora remittances diverted to parallel market
In a related development, Shonubi had attributed the crash of the naira against the dollar and its inability to manage the foreign exchange market to the diversion of diaspora remittances to unofficial markets like the parallel.
He explained that many diaspora remittances came to Nigeria in dollars and were not documented officially, as they end up in the parallel market.
He also noted that the challenge with the unofficial market or parallel market is that due to the fact that it is not regulated, it becomes an easy place to have criminal activities.
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