Elumelu Hails Emefiele for Restoring Credibility to FX Market

• Elumelu Hails Emefiele for Restoring Credibility to FX Market

The Chairman of United Bank for Africa, Mr. Tony Elumelu, has praised the Governor of Central Bank of Nigeria (CBN), Chief Godwin Emefiele, for restoring credibility, transparency and confidence in the foreign exchange market.

Elumelu, who is also the Chairman of Heirs Holdings said on Sunday that recent policy initiatives of the central bank under the watch of Emefiele had restored predictability, improved market confidence and significantly added a boost to the value of the national currency, fuelling optimism that the economy would soon rebound from recession.

He, therefore, urged Nigerians to cooperate with the bank as it moves to consolidate its policies which are aimed at strengthening the naira in the days ahead.

The CBN recently introduced new FX measures, which among other things, were aimed at easing the burden of travellers and to ensure that transactions are settled at much more competitive exchange rates.

The bank had also directed all commercial and deposit banks to open FX retail outlets at major airports as soon as logistics permit.

Furthermore, as part of efforts to further increase the availability of FX to all end-users; the CBN said it had decided to significantly reduce the tenor of its forward sales from the former maximum cycle of 180 days, to no more than 60 days from the date of transaction.

These initiatives as well as its steady intervention in the market saw to the significant appreciation of the naira exchange rate against the dollar, hovering around N450/$1 at the parallel market as at Sunday.

Also on Sunday, the central bank directed all commercial banks to open teller points for retail FX transactions as part of the efforts to meet the demand for foreign exchange.

The initiative is to ease access to buying and selling of the greenback in all locations as well as ensure access to FX by bank customers and other users, without any hindrance.

The central bank stated this in a circular titled: “Update to Foreign Exchange Directives” dated March 3, 2017, which was signed by its Director, Financial Markets Department, Dr. Alvan Ikoku.

In addition, the central bank directed all banks to ensure that they have electronic display boards in all their branches, showing rates of all trading currencies, adding that customers must insist on processing FX transactions based on the displayed rates.

“Banks are mandated to process and meet the demand for travel allowances (PTA/BTA) by end-users within 24 hours of such applications, as long as the end users meet basic requirements already outlined in earlier directives; and banks are mandated to process and meet demands for school fees and medical bills within 48 hours of such application,” it said in the statement.

The central bank warned that non-compliance with its directives would attract sanctions, including but not limited to being barred from all future CBN foreign exchange interventions.

These measures, according to the central bank, are also expected to further increase FX availability to all end-users and ensure that a fair and verifiable exchange rate operates in the market.

In line with its resolve to sustain the positive momentum in the FX market, the CBN at the weekend pumped additional $350 million into the market. The intervention took the total amount supplied to the market by the central bank last week alone to $570 million and was expected to further crash the value of the dollar in the coming days.

The naira traded between N450 and N460 to a dollar at some parallel market points in Lagos last Friday.

The consistent and forceful intervention by the central bank clearly brought panic among speculators who were yet to recover from the losses some of them have suffered in the last two weeks owing to the sharp and sudden appreciation of the naira, according to market sources.

Commenting on the development, the Acting Director, Corporate Communications, Isaac Okoroafor, noted that with the improving reserve levels, the central bank was determined to continuously make forex available to all genuine customers through their banks, advising those hoarding the greenback to reduce their losses by selling down their dollar stock.

Sources also spoke of the likelihood of a liquidity glut as banks were beginning to send out sales people to scout for customers to buy the dollars in an effort to avoid losses arising from the expected further appreciation of the naira.