{"id":97377,"date":"2023-10-16T08:14:42","date_gmt":"2023-10-16T07:14:42","guid":{"rendered":"https:\/\/bodexng.com\/?p=97377"},"modified":"2023-10-16T08:14:45","modified_gmt":"2023-10-16T07:14:45","slug":"fx-restrictions-on-43-items-weakened-naira-says-cbn","status":"publish","type":"post","link":"https:\/\/bodexng.com\/2023\/10\/fx-restrictions-on-43-items-weakened-naira-says-cbn\/","title":{"rendered":"FX restrictions on 43 items weakened naira, says CBN"},"content":{"rendered":"
<\/div>\n

The Central Bank of Nigeria (CBN) says the foreign exchange (Forex) restriction placed on cement, rice, tomatoes and 40 other products contributed to the hike in dollar rate in the parallel market.<\/p>\n\n\n\n

CBN said the restriction, which was intended to reduce demand for forex in the official market, pushed demand for FX to the parallel market.<\/p>\n\n\n\n

In a statement on Friday, CBN said the restriction aimed to support local production of the 43 products to improve employment generation and conserve foreign reserves.<\/p>\n\n\n\n

\u201cThe restrictions pushed importers into the parallel market, contributing to the surplus demand for FOREX. This weakened the parallel-market exchange rate, pushing up prices,\u201d CBN said.<\/p>\n\n\n\n

According to the central bank, the forex restrictions had implications on inflation, causing the prices of affected goods to increase.<\/p>\n\n\n\n

The apex bank said it decided to remove the restriction to unify the forex market with flexible and transparent pricing.<\/p>\n\n\n\n

CBN said it wants to promote \u201corderliness and professional conduct by all Nigerian Foreign Exchange Market participants to ensure market forces determine exchange rates on a Willing Buyer \u2013 Willing Seller principle\u201d.<\/p>\n\n\n\n

\u201cThe CBN wants to ensure price stability and is seeking to boost liquidity in the Nigerian Foreign Exchange Market. As liquidity improves, we expect the distortions to moderate.\u201d<\/p>\n\n\n\n

IMPLICATIONS OF REMOVING FX RESTRICTION<\/p>\n\n\n\n

The financial regulator said a unified and well-functioning forex market \u2013 where pricing is based on a willing-buyer and willing-seller system \u2013 will make monetary policy tools effective.<\/p>\n\n\n\n

CBN said taking such action will make it possible to realise the apex bank\u2019s core functions and mandates.<\/p>\n\n\n\n

\u201cThe willing-buyer and willing-seller system allows the exchange rate to adjust to clear the market and ensure that there is always supply,\u201d the central bank said.<\/p>\n\n\n\n

\u201cIn recent months, the widening premium between the official rate and the parallel market indicates that the rate has not been setting a clearing price.<\/p>\n\n\n\n

\u201cImporters of these products rely on the parallel market to source FX for importing these goods. This puts additional demand pressures on the parallel market, thereby widening the gap with the official rate and permanently segmenting the market.<\/p>\n\n\n\n

\u201cRemoving these restrictions eliminates the need for importers of these products to go to the parallel market, reducing the pressure on the naira.\u201d<\/p>\n\n\n\n

CBN said lifting the restriction will enable producers to access cheaper imported inputs and consumers will benefit from cheaper retail products.<\/p>\n\n\n\n

The apex bank said part of the benefits of lifting the restriction is that it boosts employment, as closed factories will re-open.<\/p>\n\n\n\n

Part of the benefits listed by the CBN include price stability, which will improve Nigeria\u2019s economy and the standard of living.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Central Bank of Nigeria (CBN) says the foreign exchange (Forex) restriction placed on cement, rice, tomatoes and 40 other products contributed to the hike in dollar rate in the parallel market. CBN said the restriction, which was intended to reduce demand for forex in the official market, pushed demand for FX to the parallel […]<\/p>\n","protected":false},"author":886,"featured_media":37765,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":[]},"categories":[427],"tags":[],"jetpack_publicize_connections":[],"yoast_head":"\nFX restrictions on 43 items weakened naira, says CBN<\/title>\n<meta name=\"description\" content=\"The Central Bank of Nigeria (CBN) says the foreign exchange (Forex) restriction placed on cement, rice, tomatoes and\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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