In an effort to boost the value of the naira and reduce illegal currency trading, the federal government plans to enact new laws in the foreign exchange (forex) market, according to a report from Bloomberg citing a senior government official.
Future regulations will entail expanding the legal foreign exchange market to accept all legitimate transactions while keeping supply out of the hands of the illicit market.
- The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, has said that these reforms should take place by December and that results might be seen in a few weeks. Therefore, the naira should appreciate to its true value by year’s end instead of the value that is currently seen in the black market.“
In an interview, he clarified that the measures of the federal government are aimed at clearing the significant backlog of foreign exchange demand, believed to be close to $7 billion. This will be accomplished through improving liquidity in the naira forward market and enacting clear regulations inside the FX market.
READ MORE: Black Market Dollar To Naira Exchange Rate Today (31st October 2023)
Backstory
Since the foreign exchange market was unified in June, the Central Bank depreciated the naira, causing the currency to depreciate by about 40%. The policy’s goal was to draw in additional liquidity, but it hasn’t worked out that way.
The NAFEM recently saw naira trading at N993 to the USD, but in the parallel market, it has recently approached N1,300 per USD. The difference between the official and parallel markets is now roughly 40% wider as a result.
Finance Minister Wale Edun disclosed that the federal government expects to receive about $10 billion in foreign money in the upcoming weeks during the Nigeria Economic Summit that took place last week.
Two executive directives intended to stop the flow of foreign exchange from the official window to the parallel market are also anticipated to be signed by President Tinubu. According to Mr. Edun, these instructions are currently being publicly publicized.
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