Author Topic: FOREX TRANSACTIONS: ACTIVITY SHIFTS TO AUTONOMOUS MARKET WINDOW  (Read 1982 times)

Offline furtune

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In line with the Central Bank of Nigeria?s strategy to operate merely as an umpire in the nation?s foreign exchange market, the autonomous market segment seems to have gradually positioned itself to take the pressure off, the apex bank in managing the demand and supply pressure in the sector.


Daily Sun survey of the market last week revealed that major players in that market, seem to have risen to the occasion of playing a pivotal role in the foreign exchange transaction, by meeting customers? demand, without waiting on the CBN again for rescue intervention.

The CBN had been a dominant phenomenon in the market for many years, dictating supply and exchange rate of the naira against other convertible currencies.
But following the appointment of the present leadership of the bank, efforts were made to restructure the operation of the market as part of effort to save the dwindling fortunes of the naira. The CBN had since then restated the need for Nigerians to diversify their sources of foreign exchange and to depend less on the official source from the CBN.

It was in the light of that call the some key players took steps to absorb the heat from the Central Bank. Daily Sun reliably gathered that hotels in the country, oil companies, inflows from Nigerians overseas, the inter-bank foreign exchange market and Bureau de change outlets in the country are top on the list of autonomous sources of foreign exchange.

It was revealed that the battleground was moved to the autonomous market segment, by the cost conscious customers, who now see resources from the official CBN windows, as rather too expensive for comfort, at a time cheaper alternatives exist in the above mentioned outlets.

Although the margin between what the CBN offers and what obtains in the autonomous markets, still looks marginal, customers having volumes of transaction to process, believe such fractions may be significant in the long run. It was this cost cutting move that is fueling transactions in the autonomous end of the market as operators try to take advantage of all marginal opportunities to boost their savings. As at last week, the autonomous market rate for the dollar stood at between N118.3 and N118.5 to $1 dollar, while Euro sold for between N185 and N185.3, just as the Pound Sterling exchanged for about N230.5 among most dealers.

A source and key player in the foreign exchange market, told Daily Sun that the latest development may be a deliberate strategy by the Central Bank to exit the market without raising much dust.
I think the CBN deliberately wants it that way. It wants a situation where it will no longer play very active role in supply and sale of foreign currencies to end users in the country?.

The source noted
It could be recalled that the CBN had, in an attempt to make foreign currencies available to end users, created various windows, through which customers? would be met, on the understanding that relying overwhelmingly on the apex bank would only put undue pressure on it and the local currency.

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