LAGOS, NIGERIA (VOICE OF NAIJA)-The Independent Media and Policy Initiative (IMPI) has commended the federal government and the Central Bank of Nigeria (CBN) over the ongoing reforms to strengthen the naira against global currencies.
Chairman of IMPI, Niyi Akinsiju issued a statement on Wednesday, acknowledging the swift and decisive actions taken to address the foreign exchange market’s supply and demand dynamics.
“A commendable example of such policy action is the administrative directive issued to Deposit Money Banks (DMBs) by the Central Bank of Nigeria (CBN), instructing them to adjust their Net Open Positions (NOP) within a short notice,“
Akinsiju praised the CBN Governor, Olayemi Cardoso, for his adeptness in formulating and implementing policies that have reshaped the monetary policy and exchange rate landscape.
He highlighted key initiatives, such as the administrative directive issued to Deposit Money Banks (DMBs) to adjust their Net Open Positions (NOP) within a short notice, aimed at stimulating forex supply by offloading excess foreign currency assets.
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Furthermore, IMPI emphasized the significance of new International Money Transfer Organisations (IMTO) rules introduced by the CBN, which aim to regulate remittances in Nigeria. These rules, viewed as essential auxiliary policies, seek to streamline person-to-person payments from individuals abroad to recipients in Nigeria, contributing significantly to the country’s foreign exchange inflows.
The policy think tank underscored the impact of clearing forex backlogs, particularly the settlement of over $7 billion in outstanding CBN commitments on swap deals and returns to foreign investors. This clearance, IMPI noted, has alleviated pressure on the national economy and positioned it for capacity optimization, potentially attracting increased foreign investment.
Comparatively, IMPI analyzed recent monetary policy actions in Egypt, where a free-float regime was adopted in response to economic challenges. Unlike Egypt, Nigeria has pursued a self-determined path, without significant fiscal interventions from external sources. Despite facing similar economic difficulties, Nigeria’s approach has yielded positive results, with the naira showing signs of stability and certainty, factors crucial for foreign investor confidence and economic growth.
In addition to lauding the proactive measures taken by the CBN and the Nigerian government, IMPI highlighted specific policy interventions, such as the directive to DMBs and the IMTO rules, as instrumental in stabilizing the naira.
These initiatives, IMPI noted, have effectively addressed both the supply and demand sides of the foreign exchange market, leading to positive outcomes for the Nigerian economy.