CBN Defends Decision To Lift Forex Ban on Importers of Toothpick, 42 Other Items, IMF Agrees
- The CBN has clarified its decision to lift foreign exchange restrictions on 43 items after 8 years
- These restrictions were imposed by the former CBN management team led by Godwin Emefile.
- Importers of items such as toothpicks, cement, and rice will now have full access to purchase dollars at official markets
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The Central Bank of Nigeria has explained its decision to lift its foreign exchange restrictions on the 43 items.
The restrictions, which were imposed in 2015, stopped importers of cement rice, Toothpicks, Glass and glassware, and Tomatoes/tomato pastes, among others, from accessing the official market.
Source: Facebook
This forced importers to source their foreign exchange from the black market, which exerted pressure and weakened the naira.
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CBN explains decision to remove restrictions
In a document shared on its website, the apex bank said its decision to readmit the importers of the 43 items will help ensure price stability.
The CBN also noted that the new regime will boost liquidity in the Nigerian Foreign Exchange Market.
The document reads:
“The CBN wants to ensure price stability and is seeking to boost liquidity in the Nigerian Foreign Exchange Market. As liquidity improves, we expect the distortions to moderate.
“The CBN wants to promote orderliness and professional conduct by all Nigerian Foreign Exchange Market participants to ensure market forces determine exchange rates on a Willing Buyer – Willing Seller principle.
"The CBN wants a unified market for FOREX with flexible and transparent pricing.”
CBN gives more reasons
CBN stated that the policy implies that Monetary Policy tools would become more effective by achieving a unified, well-functioning market for FX, where pricing is based on a willing-buyer and willing-seller system.
The apex bank assured that with this, its core functions and mandates will become achievable.
CBN added:
“The willing-buyer and willing-seller system allows the exchange rate to adjust to clear the market and ensure that there is always supply. In recent months, the widening premium between the official rate and the parallel market indicates that the rate has not been setting a clearing price.
“Importers of these products rely on the parallel market to source FX for importing these goods.
"This puts additional demand pressures on the parallel market, thereby widening the gap with the official rate and permanently segmenting the market.
"Removing these restrictions eliminates the need for importers of these products to go to the parallel market, reducing the pressure on the naira.
“The hitherto FX restrictions had implications on inflation, causing the prices of affected goods to increase.”
IMF agrees
Meanwhile, The International Monetary Fund (IMF) has commended the Central Bank of Nigeria’s decision to remove restrictions on 43 items previously restricted from accessing foreign exchange at the official window.
The Director of the African Department, IMF, Abebe Aemro Selassie said that the I think the direction the CBN has moved is a helpful one, ThisDay reports.
Yemi Cardoso unveils his plans as CBN Governor, promises shift From Emefiele's Policies
Legit.ng reported that Olayemi Cardoso, the Central Bank of Nigeria (CBN) governor, has promised a policy shift in the future direction of the apex bank.
One of Cardoso's plans is to shift CBN's focus away from direct involvement in development finance initiatives, a hallmark of former Godwin Emefiele's leadership.
Under Emefiele, the CBN developed over 12 intervention Programmes. They include the Anchors Borrowers Programme for farmers, the Power and Airline Intervention Fund (PAIF), and the Youth Innovative Entrepreneurship Development Programme (YIEDP).
Source: Legit.ng
