Forex Turnover Hits $53.02m After CBN Lifts 43-Item Forex Ban

Forex Turnover Hits $53.02m After CBN Lifts 43-Item Forex Ban
Written by Bola Abraham

The Central Bank of Nigeria (CBN) has removed the restriction on importers of 43 items from buying foreign exchange on its official platform, a policy that was imposed in 2015 to save foreign reserves and promote local production.

The CBN said in a statement on Thursday that the move was part of its commitment to increase liquidity in the forex market and support economic recovery.

“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 statement said.

The statement, signed by the Director, Corporate Communications, Isa AbdulMumin, did not give any reason for the policy change.

The 43 items include rice, cement, textiles, fertilizers, soap, toothpicks, cosmetics, furniture, tomato paste, poultry products, among others.

According to data from the FMDQ on Friday, the liquidity on the Investors and Exporters (I&E) forex window declined to $53.02m from $60.30m on Tuesday.

However, the naira appreciated slightly on the I&E window as it exchanged at 764.86/ on Thursday.

Analysts at Cordros Securities said in a report on Friday that while the CBN’s action was a step forward, it was not enough to address the forex challenges in the country.

“In our view, while this is another step forward, we think FX liquidity should take prominence to avoid further FX pressures at the official and parallel markets, more so that the FX queue will now be longer at the official market without liquidity,” they said.

“Perhaps this is a signalling tool by the CBN to shift attention away from the parallel market and reduce the pressure of the official market playing a catch-up game with the unofficial exchange rate.”

They added: “Hence, in terms of impact, we think FX pressures will increase in the official market in the near term, while the parallel market rate is likely to appreciate as the importers of these 43 items move to the official market.”

The CBN’s policy reversal came amid rising inflation and exchange rate pressures in the country, as well as calls for more flexibility in the forex market.

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