FG Announces Forex Automation Plan To Fish Out Those Behind Naira Fall as Dollar Crosses N1,200

FG Announces Forex Automation Plan To Fish Out Those Behind Naira Fall as Dollar Crosses N1,200

  • The federal government is ready to combat foreign currency speculators to assist the naira in its recovery
  • A new forex policy will be implemented to ensure all forex trading in Nigeria is digitised
  • This will enable the federal government to track transactions and ensure that the demand pressures on the naira are genuine

The federal government has announced plans to automate transactions in the entire foreign exchange market.

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, disclosed this at the first panel session at the 29th Nigeria Economic Summit (#NES29) on Monday, October 23, 2023.

Forex market and FG plans
FG wants to automate forex transactions across all markets Photo credit: Bloomberg
Source: Getty Images

Edun said the move will help close wide arbitrage and punish naira speculators.

How the new automated forex will work

Speaking at the conference, Edun said the government would ensure all dealings in the foreign exchange (forex) market – from the official to the parallel market where huge arbitrage consistently occurs – would be thoroughly monitored for offenders to be fished out and punished, Punch reports.

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On why the naira is suffering, the minister admitted that Nigeria's foreign exchange market was not functioning effectively due to illiquidity.

He added that the Tinubu-led administration is now prepared to do everything required to change the status quo.

Expert reacts

A Lagos-based economist, Kelvin Enojia, told Legit.ng that the federal government's plans to automate forex are opaque and need clarification.

"I honestly don't understand what the federal government is trying to do or what they mean by digitalizing FX transactions. I believe forex is already digitalized in the official market. I'm not sure any bank gives 1 million in cash to an importer."
"Unless they intend to digitalise forex transactions for Bureaux de Change (BDCs) to have more information on buyers and sellers."

Naira to dollar black market

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Edun's comment comes as the naira at the black market continues its free fall against the US dollar and other foreign currencies.

Checks by Legit.ng show that on Tuesday, October 24, Nigerian currency at the parallel and Peer-to-Peer(P2P) windows of the unofficial markets are still trading above N1,200.

Data from Abokifx shows that at the parallel market, naira exchanges against the US dollar at N1, 225, an N25 depreciation when compared to Monday's closing rate of N1, 200.

While at the P2P market, most used by fintech and crypto companies, a dollar sells for N1,229 against the naira.

Yemi Cardoso unveils his plans as CBN Governor, promises shift From Emefiele's Policies.

An earlier report by Legit.ng revealed that Cardoso promised a policy shift in the future direction of the apex bank.

One of Cardoso's plans is to shift CBN's focus away from direct involvement in development finance initiatives, a hallmark of former Godwin Emefiele's leadership.

Source: Legit.ng

Authors:
Dave Ibemere avatar

Dave Ibemere (Senior Business Editor) Dave Ibemere is a senior business editor at Legit.ng. He is a financial journalist with over a decade of experience in print and online media. He also holds a Master's degree from the University of Lagos. He is a member of the African Academy for Open-Source Investigation (AAOSI), the Nigerian Institute of Public Relations and other media think tank groups. He previously worked with The Guardian, BusinessDay, and headed the business desk at Ripples Nigeria. Email: dave.ibemere@corp.legit.ng.

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