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Nigeria’s central bank to intervene in FX market, ends forex ban on 43 items

Published

1 year ago

October 13, 2023

The Central Bank of Nigeria plans to intervene in the country’s foreign exchange market occasionally to boost liquidity.

The bank also revealed it was ending an eight-year ban on 43 items that had been restricted from accessing forex on the official market, and stressed the intention to quickly clear the bank’s backlog of unsettled forex obligations to local lenders, estimated at about $7 billion.

The bank spokesperson, Isa Abdulmumin said in a statement on Thursday that “As part of its responsibility to ensure price stability, the CBN will boost liquidity in the Nigerian Foreign Exchange Market by interventions from time to time”.

Abdulmumin added that the central bank sought to attain a “single forex market” and “consultation is ongoing with market participants to achieve this goal … as market liquidity improves, these CBN interventions will gradually decrease”.

Due to speculation and excess demand being directed to the black market, the naira has been losing value on the parallel market, creating a larger disparity with the official market, where trading restrictions were removed in June.

When the official Investors and Exporters window of the foreign exchange market opened in June 2023, the Central Bank of Nigeria instructed Deposit Money Banks to eliminate the rate cap on the naira and permit the currency to freely float against the dollar and other major world currencies. But that has not yielded much fruit as the Naira now exchanges for as high as over 1,000 to the dollar.

According to Charlie Robertson, head of macro strategy at U.K.-based FIM Partners, the most recent actions taken by the central bank are “another market-friendly step” to harmonise exchange rates and lessen pressure on the naira in the black market, where importers of the 43 products had to acquire dollars.

“There is still more to do. To reduce forex shortages in the official market, the CBN might also need to signal that commercial banks can offer a weaker naira rate for dollars, to help increase the supply of dollars,” Robertson said.

Against reports of several unlawful practices within the apex bank in the last administration, the bank said it would continue to promote orderliness and professional conduct by all market participants to ensure market forces determine exchange rates on a “willing buyer-willing seller” principle.

Related Topics:CBN Featured Forex Nigeria

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IMF mission concludes 4th loan program assessment in Egypt

Published

1 day ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

3 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.