The official foreign exchange market, also known as the Investors and Exporters (I&E) window, would soon be recognized as the Nigerian Foreign Exchange Market (NFEM), according to acting Central Bank of Nigeria (CBN) Governor Folashodun Shonubi.
The acting governor of the CBN, Folashodun Shonubi, revealed this to participants of the 16th Executive Intelligence Management Course (EIMC) at the National Institute for Security Studies in Abuja while delivering a Distinguished Personality Lecture on “Diaspora Remittances and Nigeria Economic Development”.
This comes just two months after the top bank certified that segmentation in the foreign exchange market had been abolished and subsequently combined all segments and rates into the I&E window, which it now views as the only official forex market.
The CBN established the I&E window in 2017 to provide investors, exporters, and end users with a market trading segment that enables foreign exchange trades at exchange rates determined based on current market conditions, 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 CBN’s planned action comes as the foreign currency market liquidity crisis continues to deteriorate, causing the naira to fall to a record low of N955 to $1 on the parallel market and to trade at N781.34 to $1 in the I&E window.
The head of the Central Bank of Nigeria (CBN) had intimated that the top bank would penalize commercial banks that sold dollars illegally, and he also announced the formation of a commission to pay impromptu visits to financial institutions under suspicion of doing so.
Despite efforts to encourage people to engage in formal market transactions by offering a N5 rebate through its Naira 4 Dollar plan, he stated that the policy was still ineffectual, leading to the N5 rebate’s suspension.
He acknowledged the value of incentives in luring consumers to the legal market, though.
In a similar incident, Shonubi had claimed that the divergence of remittances from the diaspora to illicit markets like the parallel was to blame for the collapse of the naira against the dollar and its failure to control the foreign exchange market.
He clarified that a lot of dollar-denominated remittances from the diaspora arrive in Nigeria but are not legally recorded because they are intended for the black market.
The unofficial market, often known as the parallel market, presents difficulties because it is not regulated, making it a convenient location for illegal activity.
