The Governor of the Central Bank, Godwin Emefiele, has confirmed on Tuesday that the apex bank is committed to seeing to the unification the Nigerian Autonomous Exchange rate, which is the forex window where Investors and Exporters transact dollars on market-determined prices.
The CBN Governor disclosed this at an online investors’ conference with the Federal Government of Nigeria by organized CitiBank. The conference was titled COVID-19: Economic and Budgetary Update.
The government was represented at the conference by Mrs Zainab S. Ahmed, Minister for Finance, Budget and Planning; Godwin Emefiele, CBN Governor; Ms Patience Oniha, Director-General, Debt Management Office (DMO); Ben Akabueze, Director-General, Budget Office and a representative of the Hon. Minister of Health.
Emefiele revealed that as of December 2019 Nigeria saw a relatively stable market because the NAFEX rate and rate that the Central Bank does transaction outside the NAFEX was close to themselves, adding that at some point, the NAFEX rate me below the Central Bank rate.
The CBN Governor said the disparity between the parallel market and the NAFEX rate was created because doing dealings that are not recognized by authorities.
“The CBN has always maintained that the black market is not a good determinant of the value of the naira. You’ll find that people who are in a hurry and do not want to procure the kind of documentation required, will sometimes rush to those markets. But we have used the period of this pandemic to prove that anybody dealing in that market is dealing in an illegal business,” he asserted.
He also claimed that the COVID-19 pandemic has buttressed claims from the bank that most of the pent-up demand was not realistic. He cited the impact of the global lockdown on flights as a clear example. “These airlines are not flying and sometimes you find dollars being sold through the BDC’s into that market just to be seen that we are doing everything possible to moderate the rate,” Emefiele said.
He continues that because “airlines are not flying, and people are not travelling so there should therefore not be any demand for forex exchange in that market”.
Insisting that the trades in the black market are counterintuitive he went further to accuse those trading in the black market as those dealing in corrupt practices. “It could only be those who are dealing in what is simply called corrupt practices that will be dealing in that market and we are not about to talk about unification of our exchange rate around people who are dealing illegally,” Emefiele added.
He also claimed anyone willing to deal in forex should utilize the “recognized” NAFEX market which is why “unification will have to be around the NAFEX”. (Nairametrics)