The Minister of Finance and coordinating of the economy, Mr. Wale Edun has stated that around $10 billion of forex inflows is expected within weeks rather than months.
Mr Edun stated this during a panel session at the ongoing Nigeria Economic Summit and answered questions concerning stabilizing the foreign exchange market and enshrining liquidity in the market.
- “In addition, from the supply of foreign exchange through NNPC, increased production, reduced expenditure, from transactions such as forward sales, from our discussions with sovereign wealth funds, that are ready to invest and provide advanced alongside that investment, there is a line of sight of $10 billion worth of foreign exchange in the relatively near future in weeks rather months.”
Measures to ensure liquidity in the forex market
The Minister further said President Tinubu has signed two executive orders geared towards ensuring liquidity in the forex market.
- “Mr. President announced that he had taken measures to ease illiquidity in the forex market which we know is very problematic at this time.”
- “The market is illiquid; it’s not functioning properly because there is no supply and there are various reasons for that. The solution that the President has put on the table is that he has signed an executive order that effectively allows under forbearance all the cash that is in the domestic economy to legally come into the formal money supply”
- “Along with that, there is another executive order that allows domestic issuance of foreign currency instruments so that they will have the incentive to provide that foreign exchange from whatever source.”
Since the unification of the foreign exchange market in June, the naira’s value has slumped by over 100% on the parallel market.
The current CBN management has introduced a slew of measures to provide liquidity but the chasm between the rate on the I&E window and parallel market continues to widen.