Following the Central Bank of Nigeria’s (CBN) decision to lift the forex ban on 43 items, Nigeria has witnessed a substantial drop in dollar supply.
The CBN, in a significant shift in monetary policy, reinstated access to forex for these 43 previously restricted items.
The ban on these items had been in place since June 2015, with the aim of ensuring the stability of the foreign exchange market and optimizing the benefits derived from imported goods and services.
Among the items now removed from the forex ban list are rice, cement, toothpicks, margarine, palm kernel/palm oil products/vegetable oils, meat and processed meat products, vegetables and processed vegetable products, poultry (chicken, eggs, turkey), soap and cosmetics, tomatoes/tomato pastes, milk, maize, and tinned fish in sauce (Gelsha)/sardines.
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A statement issued by the CBN, signed by Isa AbdulMumin, the Director of Corporate Communications, reiterated the central bank’s commitment to promoting professionalism and orderliness among participants in the Nigerian foreign exchange market.
This is aimed at ensuring that exchange rates are determined by market forces, following the willing buyer – willing seller principle. One of the central bank’s objectives is to establish a single FX market.
The decision to lift the ban has evoked mixed reactions, with some experts expressing concerns that the new policy might exacerbate forex challenges due to increased demand without a corresponding increase in supply.
Data from the FMDQ revealed a substantial decline in dollar supply at the Investor & Exporter forex window. On Friday, the I&E window recorded a turnover of $53.02 million, a sharp drop from the $407.66 million turnover on Thursday, reflecting an 86.99% decline.
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GOOD EVENING NIGERIA reports that this decline could exacerbate Nigeria’s ongoing forex challenges as it reflects an 87% drop in the availability of foreign exchange. With a reduction in dollar supply, there may be increased pressure on the Naira’s exchange rate, potentially leading to depreciation.