By Becky Usman
The Federal Government is set to revolutionize the entire foreign exchange market by automating transactions, aimed at curbing extensive arbitrage and penalizing speculators betting against the Naira.
Wale Edun, who serves as both the Minister of Finance and the Coordinating Minister of the Economy, made this announcement during the inaugural panel session of the 29th Nigeria Economic Summit (#NES29).
Edun’s declaration followed President Tinubu’s commitment to addressing liquidity issues in the foreign exchange market and resolving any pending backlogs. The proposed automation of all foreign exchange dealings, from official channels to money changers, seeks to closely monitor and identify offenders who engage in arbitrage, subjecting them to appropriate penalties.
The Minister also revealed that the President recently signed two executive orders. The first executive order facilitates leniency for all existing cash in circulation, allowing it to enter the formal financial system, thus legally enhancing the money supply. The second executive order permits the domestic issuance of foreign currency to incentivize the provision of foreign exchange from various sources.
Furthermore, there is a broader plan to revamp the foreign exchange market, which will be unveiled progressively. Edun acknowledged the inefficiency of Nigeria’s foreign exchange market, primarily due to liquidity issues, and expressed the government’s determination to rectify this situation.
He emphasized that the revamped foreign exchange market will be simplified and reformed to ensure that all legal and legitimate transactions fall within the jurisdiction of the authorities and the formal foreign exchange market. Any transactions outside these bounds will be considered illegal, constituting a criminal offense that will be subject to punishment.
Yemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), reassured the public that the central bank will take its mission of ensuring price stability very seriously. The goal is to establish a foreign exchange market that is transparent, predictable, and free from opacity. The central bank intends to release a comprehensive document outlining the rules and regulations governing this new framework.