The Central Bank of Nigeria (CBN) held a meeting with treasurers of banks, one of a series of consultations with critical stakeholders in the financial system, to discuss its planned adoption of a flexible exchange regime.
A reliable industry source, who confirmed the meeting with bank treasurers said it took place in Abuja. The CBN is also slated to meet with bank chief executives and other operators in the financial system and the wider economy before announcing the rules for the flexible exchange rate regime. CBN Governor, Mr. Godwin Ifeanyi Emefiele, had at the last Monetary Policy Committee (MPC) meeting, said the central bank resolved to introduce greater flexibility in the foreign exchange market, but would retain a small window for critical transactions for prospective investors.
“With the foreign exchange market framework now ready, the MPC voted unanimously to adopt greater flexibility in the exchange rate policy to restore the automatic adjustment properties of the exchange rate,” Emefiele said.
Speaking in an interview with a bank treasurer who preferred to remain anonymous, confirmed the meeting with the central bank governor saying:
“Whatever CBN is going to release as a guideline on the flexible exchange rate is expected to be something that would enable us (bank treasurers) trade in the market. So if the guidelines are the ones that would not allow us trade effectively, it doesn’t make any sense. Basically, the meeting was about getting traders’ views on the proposed flexible exchange rate, to find out expectations for the market and if there are grey areas that could be hormonised. I want to believe that is why the guidelines are being delayed. Probably after this meeting, in the next few days they would be released. The banks are major stakeholders and the treasurers are the ones in the market.” he said
Since the pronouncement was made at the last MPC meeting, the markets and investors have been waiting with bated breath for the central bank to unfold the policy. Experts have also warned that the delay might cause uncertainty in the economy. The new policy direction of the central bank has also got the backing of President Muhammadu Buhari who has endorsed the flexible exchange rate regime, even as he remains against devaluation of the naira. The president’s media aide, Garba Shehu, said:
“The president is opposed to devaluing the naira, he has said so repeatedly…but he has given them (CBN) the leeway to introduce what he has called flexibility in managing the currency’s value.”
To analysts at Lagos-based CSL Stockbrokers Limited, said the move to a flexible exchange rate is in line with what the market has been expecting. Over time, the move is likely to increase the supply of US$ liquidity to the interbank market as remitters and exporters are likely to be more willing to sell dollars at the lower interbank rate.