The Central Bank of Nigeria, on Friday, announced that it was returning the foreign exchange market to the Wholesale Dutch Auction System.
This followed the Monetary Policy committee convened to review money and foreign exchange developments in the country.
The CBN had on January 14, announced the suspension of WDAS and put in its place the Retail Dutch Auction System following an unprecedented crash in the value of naira in the foreign exchange market.
Governor, CBN, Prof. Chukwuma Soludo, who announced the return to the wholesale system, said the decision was based on the observation that exchange rates have remained stable at both the official and parallel markets for some months now.
WDAS enables the CBN to sell foreign exchange through banks while with the RDAS, companies and individuals can source their foreign exchange needs through the apex bank and their authorised dealers.
Soludo said the apex bank would remove all restrictions imposed on the market in order to attain full liberalisation in the next three months.
He said, ”The MPC observed that the medium term outlook for the forex market was stable. Consequently, the MPC decided to review the series of controls instituted in the last few months and over the next three months return to the fully liberalised regime that that we had before the recent controls.
”We believe that the premium between the parallel and official exchange rates will narrow significantly in the days ahead and we can sustain the changes over times. The CBN is also exploring the possibility of introducing futures and swaps in the foreign exchange market.”
The CBN boss added, ”As a first set of measures towards the return to WDAS, the committee decided to increase the net foreign exchange open position for banks from one to 2.5 per cent with immediate effect, while keeping in view the possibility of raising it further at the end of June 2009.
”Banks are no longer mandatorily required to sell to the CBN, after five days, funds sourced from non-RDAS and non-oil export proceeds and may use such funds for inter-bank transactions.
”Government agencies and oil companies will have the discretion to sell foreign exchange at the interbank foreign exchange market or to the CBN with effect from May 25 (Monday).”
Other policies measures taken at the MPC include the removal of the requirement that banks sell foreign exchange at one per cent around CBN rate as the apex banks will henceforth participate in the inter-bank foreign exchange market.
Soludo also announced that approvals-in-principle has been granted to 50 non-bank bureau d‘change to operate as class A BDCs. With this new status, the BDCs can now have access to official foreign exchange from the apex bank.
The apex bank also decided to issue short-term instruments to be synchronised with the Debt Management Office‘s issuance of FGN bonds in order to mop up excess liquidity in the system.
0 comments:
Post a Comment