Forex Market Defies CBN’s Reforms As Exchange Rate Drops To Record Low Of N2,040/£

The liquidity challenges in the forex exchange market continued on Monday with the parallel market rate recording its weakest decline as the naira exchanged for as low as N2,040 to a Great Britain Pound.

The record decline of the naira to N2,040 is caused by the persistent demand in the foreign exchange compounded by inadequate supply of the currency to meet demand.

This depreciation stands as an unprecedented occurrence, representing the lowest point in the historical performance of the Naira.

These developments persist despite the Central Bank of Nigeria’s implementation of several policies aimed at bolstering the supply of foreign exchange.

At least five circulars have been issued by the CBN to curtail the fall of the naira as banks and International Money Transfer Operators were not spared.

On Jan 29, the CBN issued a circular to authorised dealers titled, Financial Markets Price Transparency.’

The CBN accused authorised dealers and their customers of reporting inaccurate and misleading information on transactions. The circular threatened to sanction erring dealers.

Another policy was introduced in a circular dated January 31, 2024 on ‘Removal of Allowable Limit of Exchange Rate Quoted by the International Money Transfer Operator.’

The circular which reversed previous CBN circular dated September 13, 2023 stated that International Money Transfer Operators are required to quote rates within an allowable limit of -2.5 per cent to +2.5 per cent around the previous day’s closing rate of the Nigerian Foreign Exchange Market.

In its bid to resuscitate the naira and the economy, the apex bank issued another circular on the 31st of January, boosting diaspora remittances via official channels to Nigeria.

The CBN issued another circular on January 31, titled, ‘Reviewed Guidelines of International Money Transfer Services in Nigeria.’

The apex bank prohibited all banks from operating International Money Transfer services but can act as agents.

Also, Financial Technology Companies are not allowed to obtain approval for IMTO.

The CBN further released a circular on February 8 on the Removal of the spread on Foreign Exchange Transactions. The circular removed the spread on foreign exchange transactions in the interbank market.