Dollar to crash below N1k as CBN prepares to introduce new forex guidelines for Banks, BDCs

The Central Bank of Nigeria (CBN) has announced plans to introduce a new foreign exchange guideline for banks and Bureau de Change operators in the country in order to save the naira from speculators.

The CBN also said it has also approved a new framework to tackle inflation, but awaits inputs from the fiscal authorities.

The apex bank governor, Olayemi Cardoso, announced the decision on Frida, Novembeer 24 when speak at the 58th Annual Chartered Institute of Bankers Dinner.

This is Cardoso’s first meeting with banking executives since he assumed office.

CBN forex exchange plans

Cardoso admitted that with the recent developments in the domestic market, Nigeria is faced with severe issues that are driven by insecurity which has resulted in decreased national output of agricultural produce and infrastructural issues.

Cardoso words: 

“The primary mandate of the CBN is to ensure price stability in addition to other objectives such as issues legal tender currencies and safeguarding our external reserves, promoting a sound financial system and providing financial advice to the government.

“In line with our strategy to refocus on our core mandate, the CBN will discontinue direct quasi-fiscal interventionist activities and instead utilise orthodox monetary policy tools for implementing monetary policy. As part of this refocus, the CBN has just approved the adoption of an explicit inflation targeting framework to enhance the effectiveness of our monetary policy.

“The details and requirement of this framework are currently being finalised alongside the fiscal authorities. Additionally, the CBN will provide forward guidance, enhance transparency and maintain effective communication with the public to build trust among stakeholders.”

He said his monetary policy will aim to achieve price stability, foster economic growth, stabilise the exchange rate of the naira and reduce interest rate to facilitate investment in the real sector.

“In order to ensure the proper functioning of domestic and foreign currency markets, clear, transparent and harmonised rules governing market operations are essential. New foreign exchange guidelines and legislation will be developed and extensive consultation will be conducted with banks and FX operators before implementing any new requirements.”

The CBN governor also revealed that the first tranche payments have been made to 31 banks to clear the backlog forward obligations.