Central Bank of Nigeria, CBN has again been commended for its decision to close two of its foreign exchange windows, the Retail Dutch Auction System, RDAS and the Wholesale Dutch Auction System, WDAS foreign exchange windows to reduce pressure on the nation’s foreign reserves arising from sharp practices and market arbitraging.
The Coalition of Civil Society Organizations, CSO which gave the commendation at the weekend, said the decision would definitely curb the risk posed by JP Morgan, which recently threatened to throw Nigeria out of its key emerging currency bond index, as a result of dwindling FX reserves, which called to question the country’s current credit ratings.
President of the organisation, Comrade Etuk Bassey Williams, while addressing the press in Abuja, said experts’ analysis shows that the closure would effectively end round-tripping, speculative demand, rent-seeking and spurious demands for foreign exchange.
He said since the intention is to save the nation’s currency, Nigerians should rally round the apex bank at this trying time instead of castigating every move of the bank.
According to him: “As an organization, we have seek experts opinion on this and have been assured that the motive behind the closure were purely on national interest, we therefore give our supports and urged Nigerians not to play politics with such important issues as it will affect every aspects of the nation’s life.”
He said analysts at FBN Capital have assured that it was a necessary move towards ensuring that the naira stabilises and reflects demand and supply dynamics, and should assist in improving market depth and efficiency.
The CSO president recalled that the CBN move was aimed at averting the emergence of a multiple exchange rate regime and preserves the country’s forex reserves, which has plummeted in recent times.
While noting that it demand that all forex should be channeled to the Interbank Foreign Ex-change Market, he lamented that its huge foreign exchange disbursement over the years has so far not had any significant impact on the economy hence the decision to close the window.
Williams said the bank’s decision was positive news that should help create more transparency in the Nigerian market, saying experts have revealed that with the current oil prices levels with FX reserves would be difficult to replenish, CBN’s appetite for continued support of the interbank FX rate would be closely monitored.
He praised the CBN governor, Mr. Godwin Emefiele, on his policies since he assume office saying President Goodluck Jonathan’s decision to appoint him at such a trying time was the best thing that could have happened to the nation.
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