Nigerian Central Bank Lifts Forex Restrictions on 43 Items — Market Forces to Determine Exchange Rate
The
Central Bank of Nigeria (CBN) announced on Oct. 12 that it had lifted foreign exchange restrictions
“hitherto placed on the importation of 43 items.”
In a statement that addresses
why the restrictions (initially imposed on June 23, 2015)
have been removed, the CBN claimed the measures were forcing importers to source the scarce resources on the parallel market.
On the parallel market where the greenback was, and still is widely available, importers were forced to pay premiums starting
from 20% to get U.S. dollars. Some experts on the Nigerian economy insisted then that the official exchange rate greatly overvalued the local currency.
However, immediately following his inauguration as Nigeria’s new leader,
Tinubu reportedly ordered the CBN to abandon the fixed exchange rate regime.
The central bank, which is now led by
Olayemi Michael Cardoso, said the growing gap between the official and parallel market exchange rate could well indicate that the rate
“has not been setting a clearing price.”
The CBN also said the removal of the restrictions would
benefit local producers in the form of cheaper imported inputs while consumers are expected to
“benefit from cheaper retail products.”
