Reporter: Tobi Adetunji
The Central Bank of Nigeria (CBN), has been advised to treat violation of the instructions given to the Nigerian commercial Banks on Foreign currencies (FX) as an economic Sabotage.
Dr. Wunmi Bewaji, an expert in Securities and Financial Regulations, made the comment in an interview with Techeconomy correspondent on Thursday.
Airing his view on the position and various efforts of the apex bank to address the problem associated with the foreign currencies exchange (FX), Bewaji, Leeds tutored scholar, highlighted the benefits of the CBN’s directives to Deposit Money Banks (DMBs).
This, he said, will bring an immediate, noticeable increment in supply of foreign exchange in the market.
In his words: “What the banks have been doing then is to hoard the foreign currencies (FX), kind of betting or let’s say speculations. So this reduction will have the effect of increasing supply, there will be an immediate, noticeable increment in supply of foreign exchange in the market.”
Meanwhile, data from FMDQ on Wednesday showed that the Naira marginally appreciated N1,455.59 per US dollar from N1,482.57 on Tuesday.
On a day-to-day level, the Naira appreciated by N26.98 gain or a 1.85 per cent increase, to close at N1,455.59 from N1,482.57 per Dollar on Tuesday. But the black market remained unchanged at N1,470 per US Dollar at the close of Wednesday.
Flip to Thursday, the naira- exchanged between N1,300 and N1,350/$ as against over N1400/$ it exchanges the previous day.
However, with Naira ending at N1,455.59 per US dollar, the nation’s currency recorded a 37.6 per cent depreciation in January 2024.
This comes as the Association of Bureau De Change operators said it will close its offices for business on Thursday over dollar scarcity.
Wunmi said, “In the short term the price of dollars is going to crash, but in the long term, whether or not it is going to work will depend on the ability of the CBN to ensure compliance, so the CBN would have to look at the issue of effective enforcement. This is not a question of treating violations of this policy as mere infractions. It should be more than that, it should be treated as economic sabotage
He however said, “that, the success of the CBN’s policies will to be will determined by its strong enforcement, because some unscrupulous banks are going to do a lot of disguised compliance, because a lot of the banks are already trading in the misfortune of the Naira,
“If the CBN can enforce not just through payment of fines, but if heavy penalties are imposed, compliance is effectively monitored and non-compliance is punished. I think it will have significant effects on the value of the Naira.
Recall that the Central Bank of Nigeria, on Wednesday through a circular titled: “Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks”, ordered Deposit Money Banks to sell their excess dollar stock latest February 1, 2024.
The CBN, which in the circular also warned lenders against hoarding excess foreign currencies for profit. According to officials, the central bank believes some commercial banks hold long-term foreign exchange positions to enable them to profit from the volatile movements of exchange rates.
The new circular introduces a set of guidelines aimed at reducing the risks associated with these practices.
