Pol Eco Analytics, an Abuja-based economic and development research organisation, has flayed the Central Bank of Nigeria (CBN’s) policy somersaults in its bid to boost forex (FX) liquidity.
The organisation observed that the CBN has again re-introduced the Retail Dutch Auction System (RDAS) to conduct the sale of foreign exchange to end users after the apex bank jettisoned it.
In a press statement in Abuja, on Sunday, Mr Olamilekan Adefolarin, the lead researcher and Policy Analyst, Pol Eco Analytics, said the organisation is strongly in support of any genuine and proactive monetary policies that would strengthen the ailing naira at this point, this is not the first time the dutch auction systems process is being implemented by CBN.
He recalled that under Godwin Emiefele, the Retail Dutch Auction System (RDAS) was used against the Wholesale Dutch System (WSDAS) implemented under Emir Sanusi Lamido Sanusi.
“Significantly, the Whole Sale Dutch System allowed CBN to sell FX to banks alone, while on the other hand, the Retail Dutch Auction System (RDAS) allowed direct sales of forex to end users by CBN through the banks.
“Unfortunately, the excuse given for dumping the Whole Sale Dutch System (WSDAS) for the Retail Dutch Auction System (RDAS) was the dollarisation of the Nigerian economy. Similarly, the CBN had deployed an Inter-Bank Settlement Allocation Rationale to sell forex (fx).”
The Lead Researcher, Pol Eco Analyst, expressed concerns that over the last nine months, the apex bank has introduced different short to medium-term strategies for fixing Nigeria’s forex challenges and Medium-to-Long Term Strategy focused on improving FX Inflows and stabilising the Naira, as well as interventions to reduce the challenges faced by diaspora remittance flows, and forex from oil and gas receipt flow into our External Foreign Reserve.
Others, he said, include strengthening surveillance and technological capabilities to monitor cryptocurrency transactions, and while all FX transaction windows have been consolidated into the NAFEM platform, the CBN removed the exchange rate cap to enable International Money Transfer Operators’ (IMTOs) participation, as well as revamping the Bureau de Change (BDC) segment.
“Without a doubt, the CBN’s current policies, despite promising long-term benefits, have challenges because the model fails to address the challenge of attracting adequate liquidity sustainable for the Nigerian macroeconomic environment.”
While acknowledging that current monetary reforms are crucial to helping overcome naira depreciation, Pol Eco Analytics said that to make a lasting difference in monetary policy impact in Nigeria, Cardoso should refrain from policy experimentations amid the various policy reforms targeted at stable FX liquidity.
“Regrettably, many Nigerians have yet to come to terms with the CBN’s free float exchange rate regime, and questions are still being asked about the willing-buyer and willing-seller regime of the Investors and Exporters Window.
“Pol Eco Analytics strongly believes that addressing naira’s volatility will not be achieved through policy experimentation but by strategically tackling liquidity concerns,” he said.
![Afreximbank Backs Fidelity Bank with $40 million on Acquisition of Union Bank [UK]](https://techeconomy.ng/wp-content/uploads/2024/06/Afreximbank-Backs-Fidelity-Bank-with-40-million-on-Acquisition-of-Union-Bank-UK--120x86.png)
