The Federal Government yesterday announced plans to automate transactions in the entire foreign exchange (FX) market with a view to closing the wide arbitrage and punishing naira speculators.
This is even as Nigeria expects an influx of $10 billion inflows within the coming weeks to ease liquidity challenges in the FX market,
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, disclosed this at the first panel session of the 29th Nigeria Economic Summit (#NES29), organized by the National Economic Summit Group (NESG) in Abuja.
He said all dealings in the foreign exchange market – from the official to the parallel market where huge arbitrage has consistently occurred – would be thoroughly monitored, while offenders would be fished out and punished.
“Foreign exchange market will be simplified and reformed such that all legal and legitimate transactions will fall within the purview of the authorities and in the formal foreign exchange market. Anything outside that will be illegal, a criminal offence and will be punishable,” Edun said.
On the $10billion FX inflow, the minister said: “In addition, from the supply of foreign exchange through NNPC, increased production, reduced expenditure, from transactions such as forward sales, from our discussions with sovereign wealth funds, that are ready to invest and provide advanced alongside that investment, there is a line of sight of $10 billion worth of foreign exchange in the relatively near future in weeks rather months.”
He informed that President Bola Tinubu has signed an executive order to allow under forbearance all cash in the domestic economy to legally come into the formal money supply.
“Mr President announced that he had taken measures to ease illiquidity in the forex market which we know is very problematic at this time. The market is illiquid; it’s not functioning properly because there is no supply and there are various reasons for that.
“The solution that the President has put on the table is that he has signed an executive order that effectively allows under forbearance all the cash that is in the domestic economy to legally come into the formal money supply.
“Along with that, there is another executive order that allows domestic issuance of foreign currency instruments so that they will have the incentive to provide that foreign exchange from whatever source.”
Foreign exchange market will be simplified and reformed such that all legal and legitimate transactions will fall within the purview of the authorities and in the formal foreign exchange market. Anything outside that will be illegal, a criminal offence and will be punishable.