Nigeria Forex Crisis: Central Bank Takes Bold Step, Scraps Exchange Rate Cap for IMTOs In a surprising move, the Central Bank of Nigeria (CBN) has decided to
remove the shackles on international money transfer operators (IMTOs). No longer bound by a 2.5% cap on exchange rates, these operators can now offer
flexible naira payout rates based on market dynamics.
This decision, which supersedes a September 2023 circular, reflects the CBN's growing concern over the
stability of the naira. By allowing IMTOs to quote rates in line with prevailing conditions, the central bank hopes to address the widening gap between official and parallel market rates.
While critics argue that the caps were meant to protect the naira, they inadvertently fueled
dollar inflows into the parallel market. As a result, the naira's value took a hit, reaching new lows against the greenback.
However, early signs suggest that this policy shift is already yielding positive results. The naira experienced a
promising 8% surge against the dollar on February 1st, hinting at a potential correlation with the removal of exchange rate limits.
Amidst these developments, licensed foreign exchange dealers are reportedly considering closing shop. As Nigeria navigates its forex challenges, all eyes are on how this bold move by the CBN will shape the future of its currency.
