$10 Billion Inflow into Nigeria’s Foreign Exchange Market within weeks
Hope of reduced pressure on the naira has been raised by the Finance Minister, Wale Edun who promised an inflow of around $10 billion to solve the liquidity crisis in the foreign exchange market.
Edun at the panel session of the ongoing Nigeria Econmic Summit Group (NESG) in Abuja on Monday, said the $10 billion is expected in matter of weeks and not months.
He admitted that the exchange rate of the naira was in a free fall because the foreign exchange market was not functioning properly due to the lack of supply of dollar.
Apart from the anticipated $10 billion, he said foreign exchange was also expected from the following sources:
- Crude export by the Nigerian national petroleum company
- Increased crude oil production level
- Reduced federal government expenditure
- Transactions from the forward sale of crude oil
- Discussions with the sovereign wealth fund to invest
The minister also said that President Tinubu just signed two executive orders which would facilitate the inflow of more foreign exchange into the economy.
“Mr. President announced that he had taken measures to ease illiquidity in the forex market which we know is very problematic at this time,” Edun said.
“The market is illiquid; it’s not functioning properly because there is no supply and there are various reasons for that.”
Meanwhile, the Central Bank of Nigeria, CBN, has hinted it is working on new foreign exchange market rules.
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Dropping this hint in a panel session of the on-going 29th edition of the Nigerian Economic Summit in Abuja, CBN Governor, Yemi Cardoso, said the present travails of the Nigeria’s foreign exchange market connected to the entire fiscal and macroeconomic space, adding that any discussion on exchange rate in isolation would be shortchanging the narratives.
He added that the difficulties in the fiscal and monetary space have been tackled by the two major policy actions of the Federal Government which are the removal of the fiscal bleeding in petrol subsidy and the unification of the exchange rate.
Referencing those two measures, Cardoso said, “Now, happily, we have a situation where the bleeding with respect to Nigeria’s resources has stopped. And I refer specifically to the subsidy, and to be honest, when people say they are concerned, yeah, I get it. But frankly, I think that was the time to be concerned. Right now, from what I can see, we are on the path of rebuilding, and that is so important for us on the monetary side. If the fiscal is bleeding, it makes life very difficult for us on the monetary side. So to the extent that that has stopped. It’s a big deal”.
“This is something that we’ve tried to do for successive years and failed. And the result of not doing it, we’ve all seen. And now, suddenly, it has stopped.
“In addition to that, the attempt at unification of the foreign exchange market, fine, not by any means perfect, but at least substantial more revenues have come in. So the combination of those two things, in addition to some of the other efforts that have been done on the fiscal side, are commendable, and in due course, we will see the outcome.
