The Central Bank of Nigeria has lifted the restriction placed on the purchase of foreign exchange in the Nigerian Foreign Exchange market for importation of 43 restricted items by virtue of a 2015 circular from the apex bank. This announcement was made by the CBN in a press statement signed by the CBN’s Director of Corporate Communications, Isa Abdulmumin.
The CBN pledged to continue to promote orderliness and professional conduct by all participants in the foreign exchange market to ensure market forces determine exchange rates on a willing buyer, willing seller principle.
“The CBN reiterates that the prevailing Foreign Exchange (FX) rates should be referenced from platforms such as the CBN website, FMDQ, and other recognised or appointed trading systems to promote price discovery, transparency, and credibility in the FX rates,” the statement reads.
“As part of its responsibility to ensure price stability, the CBN will boost liquidity in the Nigerian Foreign Exchange Market by interventions from time to time. As market liquidity improves, these CBN interventions will gradually decrease.
“Importers of all the 43 items previously restricted by the 2015 Circular referenced TED/FEM/FPC/GEN/01/010 and its addendums are now allowed to purchase foreign exchange in the Nigerian Foreign Exchange Market.
“The CBN is committed to accelerating efforts to clear the FX backlog with existing participants and will continue dialogue with stakeholders to address the issue.”
The apex bank further revealed that it has set the attainment of a single FX market as one of its goals adding that consultation is ongoing with market participants to achieve the goal.
It can be recalled that in 2015, the CBN under the leadership of Dr. Godwin Emefiele restricted 43 items from accessing foreign exchange from the bank’s import and export (I&E) window.
Some of the items affected by the restriction include rice, cement, margarine, palm kernel, palm oil products, vegetable oils, meat and processed meat products, vegetables and processed vegetable products, poultry, tomatoes/tomato paste, soap, cosmetics, and head pans.
With this announcement by the CBN, importers of these 43 items can now freely purchase foreign exchange from the official foreign exchange window at market rates which is substantially lower than the rates at the unofficial or parallel market.
This will bring about a reduction in pressure at the parallel market for forex especially if the CBN maintains adequate FX liquidity in the official market.