The Independent Media and Policy Initiative, IMPI, has said that the fiscal and monetary policy authorities in Nigeria have found a way of setting the economy on a path of resilience.
The group, in a statement issued Wednesday, said its Chairman, Niyi Akinsijiu, commended President Bola Tinubu and the Governor of Central Bank of Nigeria, CBN, Yemi Cardoso, for policies that are addressing the supply and demand sides of the foreign exchange market.
It said: “To properly put this in perspective, we need to, as a matter of fact, from the outset, commend the dexterity of the CBN Governor, Olayemi Cardoso, in conceiving policies and deploying them to time and target as he virtually willed into existence a new monetary policy and exchange rate ecosystem by using policy actions to address both the supply and demand sides of the domestic foreign exchange market.”
The group stressed that one of the profound policies introduced to the market on 31st January, in the graduated steps to take charge of the market, was the administrative admonition to Nigeria’s Deposit Money Banks, DMB, to bring their Net Open Position, NOP, to the prudential limit by 1st January 2024.
It added CBN’s NOP mandate to the banks implies that no bank holds a 20 per cent long position, that is, hold more foreign currency assets than liabilities by more than 20 percent.
It noted that the strategic objective of this mandate was to get the banks to start off-loading into the open market, about $7 billion they kept in long currency positions. That was a maneuver to address forex supply side concerns.
It added: “On the same day, 31st January, when the CBN relayed the important NOP to banks, the apex financial sector regulatory body also issued the new International Money Transfer Organisations (IMTO) rules for remittances in Nigeria – the rules, which are actually a bouquet of auxiliary policies, are generally understood to mean occasions of recurring person-to-person (P2P) payments of relatively low value from persons living abroad to persons in their home country which now account for a sizeable portion of Nigeria’s foreign exchange in-flow.”