Cbn new forex policy 2018

The Central Bank of Nigeria (CBN) introduced a new foreign exchange (forex) policy in 2018, which aimed to stabilize the naira and improve the country's foreign exchange management. The policy, which was announced in April 2018, had several key components, including:

  1. Unification of Exchange Rates: The CBN unified the official and parallel market exchange rates, which had previously been different. The new rate was set at N305 per dollar, which was a significant devaluation of the naira.
  2. Introduction of a Flexible Exchange Rate Regime: The CBN introduced a flexible exchange rate regime, which allowed the naira to float freely against other currencies. This was intended to allow the market to determine the value of the naira, rather than the CBN.
  3. Increased Allocation of Foreign Exchange to Bureaux De Change (BDCs): The CBN increased the allocation of foreign exchange to BDCs, which are licensed operators that buy and sell foreign currencies. This was intended to increase the availability of foreign exchange in the market and reduce the demand for foreign exchange from the parallel market.
  4. Introduction of a Wholesale Dutch Auction System (WDAS): The CBN introduced a WDAS, which is a system where foreign exchange is allocated to banks and other financial institutions through a bidding process. This was intended to increase transparency and efficiency in the allocation of foreign exchange.
  5. Increased Monitoring and Regulation of Foreign Exchange Transactions: The CBN increased its monitoring and regulation of foreign exchange transactions, including the introduction of new regulations and guidelines for foreign exchange transactions.
  6. Increased Use of Technology: The CBN increased its use of technology to improve the efficiency and transparency of foreign exchange transactions, including the introduction of an online foreign exchange trading platform.

The objectives of the new forex policy were to:

  1. Stabilize the Naira: The policy aimed to stabilize the naira and reduce its volatility.
  2. Increase Foreign Exchange Availability: The policy aimed to increase the availability of foreign exchange in the market and reduce the demand for foreign exchange from the parallel market.
  3. Improve Transparency and Efficiency: The policy aimed to improve transparency and efficiency in the allocation of foreign exchange and reduce corruption.
  4. Promote Economic Growth: The policy aimed to promote economic growth by increasing the availability of foreign exchange and reducing the cost of doing business.

Overall, the new forex policy was intended to improve the management of foreign exchange in Nigeria and promote economic growth and stability.