Since the first quarter of the year, Nigeria has been exposed to a currency crisis triggered by a fall in oil prices. It began after two of the world’s largest oil producers, Saudi Arabia and Russia, disagreed on how to proceed with oil supply cuts, triggering a price war that pushed oil prices to fall to as low as below zero. dollars.
In March, the world became fully aware of the existential threat that was the Covid-19 pandemic, which has since affected millions of people globally and killed hundreds of thousands. These two events have had a counting effect on Nigeria’s economy. As an economy heavily dependent on crude oil, the oil price war meant that Nigeria made less on the sale of crude oil, which cascades into an even bigger problem, Forex.
As oil prices fell, pressure on Nigeria’s exchange rate increased, leading to speculation about a devaluation to reflect the true value of the naira. Thus began one of the most marked deluges of political statements and flip flops about the management of Nigeria’s foreign exchange.
In this tracker, Nairametrics compiles a timeline of all forex-related policy decisions and refusals that have occurred since March 2020. This timeline is updated regularly as new information becomes available.
August 26, 2020
The Central Bank of Nigeria (CBN) is cracking down on exporters guilty of non-repatriation of forex. This is part of CBN’s ongoing efforts to resolve the prevailing currency crisis in the country by increasing forex liquidity.
To this end, the CBN approached the banks to submit the names, addresses and bank verification numbers (BVNs) of all the exporters who have not repatriated their export proceeds. Necessary ‘action’ would be taken against such defaulters, the CBN said in a statement.
The statement further noted that the Governor of the Central Bank, Godwin Emefiele, issued the Directive on 25 August 2020, while practically attending a Banking Committee meeting.
August 24, 2020
The Central Bank of Nigeria (CBN) issued a circular removing buying agents / companies or third parties from accessing the SMIS forex window through FORM M forex purchases.
In a circular dated 24 August 2020, the apex banks instructed that “authorized dealers are hereby instructed to refrain from opening Form M, whose payment is routed through a buyer company / agent or other third parties”, which effectively removes third parties or intermediaries from trade forex deals in its official SMIS window. ”
August 6, 2020
Information on the CBN’s website revealed that the central bank had adjusted the official exchange rate to N380 / $ 1 from N360.1 / $ 1. The adjustment took place on Thursday, August 6, 2020.
This suggests that the CBN may have united the exchange rate in line with the promise made by Godwin Emefiele, Governor of the Central Bank of Nigeria.
July 13, 2020
CBN restricted access to maize imports through the official CBN forex window.
It was hinged on its decision on the need to increase local production, stimulate a rapid economic recovery, protect rural livelihoods and increase jobs lost as a result of the ongoing COVID-19 pandemic.
July 3, 2020
CBN allegedly instructed bidders in its secondary market intervention sale (SMIS) to raise their bid price to N380 / $ 1 floor. SMIS is the market where importers bid on forex using Letters of Credit and Form M.
Apex Bank reportedly informed banks that they will only accept bids from N380 / $ 1 and above and no longer N360 / $ 1, which means that those bidding lower will not receive any forex allotment.
Transaction success in this market is based on bidding with those bidding higher than the floor as they are often in an advantageous position to secure forex.
June 23, 2020
The Governor of the Central Bank, Godwin Emefiele, confirmed that the CBN will continue to pursue unification around its Nafex rate. The NAFEX exchange rate is the forex window where investors and exporters trade dollars at market-determined prices. The CBN Governor said this at an investor conference with the Federal Government of Nigeria by CitiBank.
May 21, 2020
The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, warned companies and individuals against condescending in the parallel market, popularly known as the black market.
He warned them to stop using black markets for currency exchange after the liquidity crisis triggered by low oil prices and a shortage of dollars.
May 19, 2020
The Central Bank of Nigeria (CBN) in its quest to stabilize Naira funds for the foreign exchange market through wholesale sales of secondary market measures.
The auction was previously put on hold by CBN due to the COVID-19 pandemic and declining foreign exchange reserves of less than $ 34 billion.
May 18, 2020
The Central Bank of Nigeria (CBN) had industrial conglomerates operating in the country to support the government’s efforts to grow the nation’s economy and return to its green days.
The CBN chief warned that the spit bank would not support the import of goods that could be produced in Nigeria. According to him, the bank could not spend its foreign exchange reserves on what would not boost the economy and create jobs for Nigerians.
May 10, 2020
The Central Bank of Nigeria (CBN) has assured foreign investors that the repatriation of their funds from the country is secured despite forex-related revenue shortfalls due to the decline in crude oil sales globally.
In the statement, CBN Governor Godwin Emefiele explained that the apex bank had put in place policies to ensure an orderly exit for those who might be interested in doing so, and also urged investors to be patient as such repatriations are being handled due to the bank’s policy of orderly exit of investments.
April 29, 2020
The Central Bank of Nigeria (CBN) resumed selling dollars to SMEs who need foreign currency for important imports, as well as Nigerian students in foreign schools who need to pay their school fees.
According to a brief statement signed by CBN’s director of communications at the company, Isaac Okoroafor, the top bank delivers over $ 100 million a week to the two above-mentioned categories of dollar consumers.
April 27, 2020
CBN adjusted the exchange rate for import duty payment from N326 / $ to N361 / $.
With this development, the Nigeria Customs Service (NCS) was instructed to implement an increase in customs duties to be paid on goods imported through ports.
March 27, 2020
The Central Bank of Nigeria (CBN), in a note issued to Bureau De Change operators (BDCs) in the country, suspended the sale of foreign currency for two weeks.
However, this does not affect dollar transactions in the Investors & Exporters (I&E) window. Thus, portfolio investors as well as companies that still require currency to settle foreign transactions can access the I&E window.
March 24, 2020
The CBN announced that it was cooperating with the Nigerian Financial Intelligence Unit (NFIU) to expose speculation and would charge such dealers for financial sabotage. The bank added that fundamentals of the market did not support devaluation.
March 22, 2020
The Central Bank of Nigeria (CBN) stopped the sale of dollars to the Nigerian National Petroleum Commission (NNPC) of oil companies, including international oil companies (IOCs) operating within the country’s shores.
Apex Bank explained that the shift to stop the sale of dollars is in line with its commitment to improve the foreign exchange supply to the economy, as the impact of the new Coronavirus (COVID-19) pandemic bites harder on the economy.
March 20, 2020
The Central Bank of Nigeria devalued its official exchange rate from N307 / $ 1 to N360 / $ 1. The Apex Bank reflected this change on its website, signaling a confirmation.
March 10, 2020
The Central Bank of Nigeria (CBN) fined Bureau de Change (BDC) operators for various violations in the foreign exchange market.
Over 100 BDC operators were fined N5 million each for various violations in the foreign exchange market.
March 12, 2020
The Central Bank of Nigeria (CBN) debunked speculation that made the rounds, suggesting that the naira is finally being devalued.
According to a statement, the apex bank accused “unscrupulous players in the foreign exchange market” of spreading the word.