During the Nairametrics Economic Outlook webinar over the weekend, Professor Adegbemi Onakoya, an expert in Finance and Business Transformation, remarked that the recent circular from the Central Bank of Nigeria (CBN) regarding harmonizing reporting requirements for foreign currency exposures of banks has stimulated activity in the Nigerian Autonomous Foreign Exchange Market (NAFEM) and contributed to the Naira’s prolonged appreciation.
Onakoya pointed out that the policies implemented to fortify the Naira have been effective, evidenced by its consistent appreciation against the US dollar over four consecutive weeks. The Naira closed at N1,251.05 per dollar last Friday, reflecting these gains.
Onakoya stressed that CBN’s January 31, 2024 circular to banks, titled “Harmonization of Reporting Requirements on Foreign Currency Exposures of Banks,” which mandated the harmonization of reporting and required banks to maintain adequate stocks of high-quality liquid foreign assets, like cash and government securities, in each significant currency, has boosted transparency in the foreign currency market.
“In a January 31, 2024 letter to banks on harmonization of reporting and the requirement of foreign currencies. Again, this brings transparency into the foreign currency market. At least we know we are owing.
“Essentially, the directive spurred increased activity in the Nigerian Autonomous Foreign Exchange Market, NAFEM.
“We now see a daily turnover of about $854 million weekly. That is about $1 million in a week. About four times increase,” Onakoya stated.
