The Central Bank Of Nigeria (CBN) announced a new foreign exchange Policy direction on Wednesday after a year of ineffective ‘trial and error’ type policies.
At a press briefing in Abuja on Wednesday afternoon, the CBN revealed that it had finally succumbed to common sense as it will now let the foreign exchange rate be determined by the market forces. Before now, the CBN maintained strict control of Forex rates, resulting in an official rate (which existed for businesses favored by the Government) and a parallel market rate which has soared all year.
In the simplest terms, the implication of the new policy is that the CBN will allow demand and supply to determine how much the Naira is worth against major currencies and will only intervene in the market occasionally.
Surprisingly, the 41 items for which Forex access was banned last year will still remain banned. The CBN has now introduced a “two way quote” in which buyers and sellers will be able to state the prices and quantities they’re willing to sell (Think of it like the Nigerian Stock Exchange).
As it stands, the market price for the Naira will remain at N197 until Monday morning when the market determined price will take over.