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Nigeria: CBN may have a breather from its foreign exchange fix, but can it last?

By Temi’ Lawal
Posted on Tuesday, 31 August 2021 17:37, updated on Monday, 6 September 2021 18:14

Central Bank of Nigeria's logo is seen on the headquarters building in Abuja, Nigeria. REUTERS/Afolabi Sotunde

As part of the IMF's $650bn SDR reserve allocation to member states to boost Covid-19-battered global economy, Nigeria is to receive $3.3bn later this month. The country is also to issue a $3-5bn Eurobond later this year. Analysts say these would give the Central Bank of Nigeria (CBN) the capacity to temporarily ensure FX liquidity and defend the Naira, considering the recent FX supply halt to moneychangers.
But is this the best use of the money?

At its July Monetary Policy Committee (MPC) meeting, the CBN stopped the sale of foreign exchange (FX) to moneychangers in the country and discontinued the registration of new players. In fact, it returned the licence fees to those that had paid before the announcement.