Govt seeks to stabilise naira with $10bn, eyes NNPCL for forex

The Minister of Finance, Mr. Wale Edun, has said that around $10bn of forex inflows expected within weeks rather than months.

Edun stated this during a panel session at the ongoing Nigeria Economic Summit.

He said, “In addition, from the supply of foreign exchange through NNPC, increased production, reduced expenditure, from transactions such as forward sales, from our discussions with sovereign wealth funds, that are ready to invest and provide advanced alongside that investment, there is a line of sight of $10bn worth of foreign exchange in the relatively near future in weeks rather months.”

The Minister also disclosed that the President had signed two executive orders geared towards ensuring liquidity in the forex market.

He said, “Mr. President announced that he had taken measures to ease illiquidity in the forex market which we know is very problematic at this time.

“The market is illiquid; it’s not functioning properly because there is no supply and there are various reasons for that. The solution that the President has put on the table is that he has signed an executive order that effectively allows under forbearance all the cash that is in the domestic economy to legally come into the formal money supply”

“Along with that, there is another executive order that allows domestic issuance of foreign currency instruments so that they will have the incentive to provide that foreign exchange from whatever source.”

In the near future, the Federal Government also plans to automate transactions in the entire foreign exchange market to tame wide arbitrage and punish naira speculators.

According to Edun, all dealings in the FX market, from the official to the money changers where huge arbitrage has consistently occurred, will be thoroughly monitored and offenders fished out and punished.

He admitted that Nigeria’s foreign exchange market is not functioning effectively due to illiquidity and that the government is prepared to do everything required to change the status quo.

“Foreign exchange market will simplified and reformed such that all legal and legitimate transactions will fall within the purview of the authorities and in the formal foreign exchange market. Anything outside that will be illegal, a criminal offence and will be punished,” Edun said.

In his comment, the Governor of the Central Bank of Nigeria Yemi Cardoso, assured that the apex bank, going forward, will take its objective of price stability “very seriously indeed.”

He said the plan is to have a foreign market that is fit for purpose and works for everybody, which can be predictable and with no opacity.

“We are going to come out with an elegant document that will tell you the rules,” the governor assured.

It was also disclosed that the apex bank is preparing a document that will set out clearly the rules of the foreign exchange market.

He noted that the central bank is focused on ensuring Nigeria has a market that is “predictable and without flip-flops.”

He added that while efforts to unify the foreign exchange market have not been perfect, they have led to more revenue coming into the country.

The governor also said he was expecting foreign investment inflow from foreign portfolio investors.

He added, “In due course, we will see the outcome. There are more difficult decisions to be made, but two very difficult decisions have been taken. Now, it’s a question of managing things to get to where we want to get to. And that is where we want to get to be a place where we have FX that is fixed for purpose. A FX that works for everybody. A FX market where you know the rules. A foreign exchange market where there are no policies flip-flops. An FX market that you can predict. That is what we do.”

He added, “We will come out with something that is representative of the true market because the market will adjust to some of these things over time. I’m happy to be frank.

“We have an enormous amount of interest from foreign portfolio investors, pips stakeholders who really and truly are interested in continuing to engage with Nigeria. The reason, of course, is that they can see where this is all going. I just want to say you’re going to find a Central Bank going forward that would take its objective of price stability very seriously indeed,” he added.

The Federal Government also plans to broaden the official currency market to include other “legitimate” participants, including bureaux de change and financial-technology companies.

This was according to the chairman of the presidential committee on fiscal policy and tax reforms, Taiwo Oyedele, at the economic summit.

He said, “We currently have a market that is not working and it’s not going to work in its current format.

“We don’t have sufficient liquidity even if you combine the parallel and the official markets.”

As the FX crisis persists amid promises made by the Federal Government, the naira recorded further devaluation at the parallel and official markets on Monday.

According to Bureau de Change Operators, the naira was bought at 1,210/$ and sold at 1,235/$ on Monday, from 1,190/$ sold on Friday.

At the official market on the Investor & Exporter forex window, the naira closed at 793.34/$ on Monday from 783.64/$ on Friday.

A BDC operator, Jubril Mutiu, said today (Monday), that we bought the dollar for N1,210 and sold for N1,235, the Euro was bought for N1,220 and sold for N1,235, Pound Sterling was bought and sold for N1,450 and N1,500.”

Another BDC operator Ahmed Kareem, said, “We sold the dollar for N1,190 on Friday, but today, it is N1,235; It is just falling.”

A bureau de change operator, simply identified as Edris at Palm Avenue, Mushin told The Punch that, “I buy for N1,170/$1, that is if your dollar is neat enough. But if you want to buy from me, I will sell it for N1,210.”

A forex dealer in Abuja, Suraju Ahmed, said the rate closed at N1,235/$ on Monday.

‘’We sold for N1,235/$ and bought for N1220/$ in Abuja on Monday,’’ he explained.

Another BDC dealer, Garo Abdullahi, stated, ‘’I sold for N1,230/$ and I can buy at N1222 per dollar.’’