Nigeria permits public forex rate posting for exchange rate alignment.

Nigeria has granted approval for the Association of Bureaux de Change Operators of Nigeria to publicly disclose forex rates. The objective is to reduce the gap between official and unofficial naira rates.

Aminu Gwadabe, President of the Association of Bureau De Change of Nigeria, stated that this move aims to boost market competitiveness, promote price discovery, and counteract the influence of the parallel market.

This shift marks a departure from the central bank's previous strategy, which restricted the visibility of the unofficial market to strengthen the official naira rate. However, this strategy only diverted activities to informal channels.

The Association's initiative seeks to address the challenges posed by the unofficial market, emphasizing transparency and market-driven pricing to enhance overall competitiveness.

President Aminu Gwadabe highlights the goal of fostering a more dynamic and open forex market, fostering fair competition, and reducing the impact of unregulated trading in the shadow market.



By encouraging public disclosure of forex rates, the Association aims to create a more transparent and competitive forex market, ultimately working towards aligning official and unofficial naira rates more closely.

A shift to a free market is evident as the new development ensures widespread online visibility of naira rates, marking Nigeria's transition from a managed to an open exchange rate. President Bola Tinubu initiated the currency reform journey in May, facing challenges with a 50% naira depreciation against the dollar and a growing gap between official and parallel markets.

The Economic and Financial Crimes Commission, targeting street currency traders for alleged money laundering and manipulation, adds complexity to the reform. Despite hurdles, the emphasis on rate transparency reflects a commitment to addressing Nigeria’s forex challenges and fostering a more unified, stable exchange rate environment.





Source: Investors King

Image: RegTech Africa, Naija Times