…cautions critics over forex crisis
Amidst uncertainty in the country’s foreign exchange market, the Central Bank of Nigeria (CBN) has admitted to doing lots of monitoring with regard to regulations and distribution to ease the supply side to critical sectors of the economy.
To ensure stringent compliance, the apex bank disclosed that its close watch on Nigerian exporters and their forex transactions in the Importer and Exporter (I&E) window had fetched the bank about $3 billion from July till date. The Director, Monetary Policy, CBN, Dr. Hassan Mahmud, made this known in an interview on NTA live programme ‘Good Morning Nigeria.’ He said the apex bank had been monitoring the activities of exporters who accessed funds through the window but ended up diverting the funds.
Mahmud explained that the close watch became imperative for the exporters, who are breaching the conditions in the inflows of their export proceeds by delaying its repatriation into the country He described the I&E window as a scheme created by the CBN to see more local exporters using the window boost their export trade and compete favourably in the international market. His words: “We are also monitoring the activities of exporters who have access to funds through the CBN window and at the end of the day start diverting those funds.
“We are also taking action against those that breached those conditions in which they came to take forex from the Central Bank window. If you take FX and your export proceeds are not quickly repatriated through your account, we have ways of dealing with you and put some cautions into the way you operate your account.” According to him, “that alone is also helping a lot of those funds coming into the CBN window. I can tell you that between July and now when this programme started, we have raked in close to $3 billion through that window, even though, we are paying a rebate; that is the price to be paid.”
The CBN helmsman also cautioned critics of the apex bank’s flexible exchange rate regime, saying that the financial institution regulator was doing its best to boost inflow of forex this period. He, however, said headwinds in the global economy, such as the inflation rate, Russia-Ukraine war, high crude oil prices, overdependence on importation of machinery and equipment, FX spending on petroleum product importation and reduction in external reserve, were choking the economy. Mahmud said: “CBN is also looking for dollars just like the general public is looking for dollars too because we want to use that dollar to equip our war chest to be able to intervene in the market to make price of forex come down.
“Don’t forget that we are using flexible exchange rate regime so that we can come into that space in the event that we have seen an arbitrary movement in the prices just to moderate, but not to be the major player in that space. “So, if those inflows that are expected to come are robust enough, it will spread to the critical sectors of the economy.” On what the CBN needs to do to boost forex liquidity, he stated that there was a need to strongly work on the supply side so that inflows would come. “You can see what is happening in the global economy; oil prices are going down fundamentally, production too is also going down so the proceeds from there are also being affected,” he said.