At the Nigerian Economics Summit on Monday, the Federal Government assured Nigerians and investors that an action plan is in process to increase the country’s foreign exchange liquidity and stabilise the naira.
The Tinubu government recognised the difficulties faced by the business sector in the financial markets, especially the shortage and high price of foreign exchange.
Wale Edun, Minister of Finance and Economy, promised that more foreign exchange would be obtainable soon to restore market confidence. Mr Edun explained that the Nigerian government expects a $10 billion injection of foreign currency to relieve pressure on the naira in a couple of weeks.
He added that the inflows will come from a variety of sources, including NNPC’s foreign exchange supply, increased oil production, decreased spending, forward sales, and conversations with sovereign wealth funds prepared to invest and offer advance payments.
The Minister also announced that the President has issued two executive measures aimed at ensuring FX market liquidity.
Read Also:
“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 out 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,” he said.
Furthermore, in order to encourage forex providers, President Tinubu has approved the domestic issuing of foreign currency instruments.
Mr Edun went on to say that the federal government intends to automate transactions across the whole foreign exchange market in order to reduce wide arbitrage and punish naira speculators.
According to Edun, all FX market transactions, from the official to the money changers, where substantial arbitrage has happened on a consistent basis will be closely monitored, and violators will be identified and punished.
Yemi Cardoso, Governor of the Central Bank of Nigeria, pledged that the apex bank will continue to take its goal of price stability “very seriously indeed.”
He said the plan is to have a foreign market that is suitable for everyone and that can be predictable and transparent. “We are going to come out with an elegant document that will tell you the rules.”
