CBN forex market unification successful – Rewane

The Chief Executive Officer of Financial Derivatives, Bismarck Rewane, has said that the Central Bank of Nigeria’s unification of the official and parallel foreign exchange markets rates is successful.

The renowned economist, Rewane, disclosed this during Channels Television’s business morning interview on Thursday.

He noted that the discontinuation of the Price Verification System Portal by the CBN is a testament to the country’s forex rates harmonization that has yielded results.

According to him, there is no longer an incentive for Nigeria’s foreign exchange players to roundtrip FX currency because the difference at both markets is marginal.

“….Then, it makes sense to over-invoice imports and under-invoice exports, now there is no fear of that because the difference between the official market and parallel is N10-N15, and there is no incentive for roundtripping.

“By removing the price verification system document, you are making it easier for goods to come into Nigeria. It is a good move. What the Central Bank of Nigeria is saying in essence is that there is no incentive for arbitrages as long as the price differences at the two markets are narrow.

“As a matter of fact, to all intents and purposes, we can say there is exchange rate unification in Nigeria today (Thursday).

“There is one rate because the difference between one and the other is marginal. It is an efficient move; it makes the market more transparent. As time goes on, this difference will narrow to almost zero. It is good news for the foreign exchange market. I think we will see some stability in the market now,” he said.

DAILY POST reports that CBN discontinued its PVS portal after its launch in August last year.

The development comes as the Naira exchanged at N1507.83 against the dollar on Wednesday compared to N1507.79 the previous day. Meanwhile, at the Parallel market, the Naira maintained a N1505 per Dollar exchange rate on Wednesday, the same as Tuesday.

On June 14 last year, CBN floated the Naira at the FX market to unify both official and parallel markets exchange rates.