Nigeria is taking steps to increase transparency in its foreign-exchange trading, aiming to narrow the gap between the official and unofficial rates of the naira currency.Thank you for reading this post, don't forget to subscribe!
The Association of Bureaux de Change Operators of Nigeria has received approval from the financial crimes watchdog to publicly display the buying and selling rates of the naira against the dollar online. This move is intended to improve competitiveness and price discovery in the market, challenging the parallel market, according to Aminu Gwadabe, the group’s president.
This reversal of measures by the previous central bank leadership aims to move away from a managed exchange rate, making naira rates more visible online. The efforts to ease the country’s currency regime began shortly after President Bola Tinubu took office, but challenges persist. The naira has weakened, and the spread between the official and unofficial markets has widened due to a local scarcity of dollars.
The Economic and Financial Crimes Commission has targeted street currency traders, accusing them of money laundering and manipulation. The central bank warned forex hawkers in September to stop betting against the naira or face sanctions. However, the inadequate liquidity in the official market has led to a substantial backlog of demand, estimated at around $5 billion by Finance Minister Wale Edun.
Despite these initiatives, the naira remains under pressure, reaching a record low of about 1,365 naira per dollar on the unofficial market. Questions linger about whether the rates published by exchange bureaux will significantly differ from those already collected by street dealers, who are also licensed operators.
The central bank had previously suspended online platforms by bureaux de change to publish their rates, citing rate manipulation. The exchange bureaux now plan to upscale an old website to serve as a challenger to other platforms in the economy, according to Gwadabe.