Two members of the Central Bank of Nigeria (CBN)’s Monetary Policy Committee (MPC) have called for reforms in the nation’s foreign exchange market, including managing the investor’s and Exporters (I&E) window and operations of the Foreign Currency Domiciliary Account by individuals.
The two members; Adeola Adenikinju and Mike Obadan in their separate personal views at the last MPC, said reforms would bring down pressure on the nation’s forex reserves.
Adenikinju in his own opinion said there is a need to address the naira exchange rate pressure by increasing the supply of forex in the economy, adding that foreign exchange sold at the I&E forex window should only be used for productive purposes.
He urged the Apex Bank to reconsider its policy regarding those who are eligible to benefit from foreign exchange sold in the official market.
“There is a need to address the pressures on the naira exchange rate by boosting the supply of foreign exchange in the economy.
“I am also of the opinion that the FX sold by the Bank at the I&E windows should be for productive activities alone. The Bank should review its policy of those who qualify to benefit from FX sold in the official market,” Adenikinju stated.
He also said, “The country should not normalize the negative contributions of the oil sector to economic growth. The oil sector has so much potential to contribute to economic growth, generate employment and increase FX flow into the economy. The government must be deliberate in removing all the encumbrances to oil sector performance and implement the PIA in full.”
On his part, Obadan, wants the CBN to regulate the use of domiciliary accounts by individuals in order to curb the abuse that such accounts have been subjected to.
He stated that, in addition to monetary measures, the CBN should consider bold foreign exchange market reforms.
He said the use of domiciliary accounts has been “grossly abused” in recent years, to the detriment of exchange rate stability.
According to him “In addition to the monetary measures and development finance interventions being implemented, the CBN would need to seriously consider bold reforms of the foreign exchange market, in particular, the operation of Foreign Currency Domiciliary Accounts (FCDA) by Individuals.
“These accounts have tended to be grossly abused in recent years to the detriment of exchange rate stability. Exporting firms that maintain FCDAs must be effectively monitored.”
