Cbn new forex policy 2018 and nigerian economy pdf

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CBN New Forex Policy 2018 and Nigerian Economy

In 2018, the Central Bank of Nigeria (CBN) introduced a new foreign exchange (forex) policy aimed at addressing the challenges faced by the Nigerian economy, particularly in the areas of foreign exchange management and trade facilitation. The policy, which was announced in April 2018, was designed to promote economic growth, stability, and diversification.

Key Features of the CBN New Forex Policy 2018

  1. Multiple Exchange Rate Regime: The CBN introduced a multiple exchange rate regime, which allows for the use of multiple exchange rates for different transactions. This was aimed at promoting transparency and efficiency in the foreign exchange market.
  2. Official Exchange Rate: The official exchange rate was set at N305 per dollar, while the interbank rate was set at N360 per dollar.
  3. Investment and Savings Rates: The CBN introduced two new exchange rates for investment and savings transactions, which were set at N360 per dollar and N370 per dollar, respectively.
  4. Trade-Facilitating Rate: A trade-facilitating rate was introduced, which was set at N360 per dollar, to promote trade and commerce.
  5. Restrictions on Forex Transactions: The CBN imposed restrictions on certain types of forex transactions, such as the use of foreign exchange for the importation of certain goods and services.
  6. Increased Allocation to Wholesale Market: The CBN increased the allocation of foreign exchange to the wholesale market, which was aimed at promoting liquidity and stability in the foreign exchange market.

Impact of the CBN New Forex Policy 2018 on the Nigerian Economy

The CBN new forex policy 2018 had both positive and negative impacts on the Nigerian economy.

Positive Impacts

  1. Improved Foreign Exchange Management: The policy improved the management of foreign exchange in Nigeria, reducing the challenges faced by importers and exporters.
  2. Increased Foreign Investment: The policy attracted foreign investment to Nigeria, as it provided a more stable and predictable foreign exchange environment.
  3. Promotion of Trade and Commerce: The policy promoted trade and commerce in Nigeria, as it provided a more favorable exchange rate for importers and exporters.
  4. Improved Economic Growth: The policy contributed to improved economic growth in Nigeria, as it promoted investment, trade, and economic activity.

Negative Impacts

  1. Inflationary Pressure: The policy led to an increase in inflationary pressure in Nigeria, as it reduced the purchasing power of the naira.
  2. Devaluation of the Naira: The policy led to a devaluation of the naira, which reduced the value of the currency and increased the cost of imports.
  3. Increased Cost of Living: The policy increased the cost of living in Nigeria, as it led to an increase in the prices of goods and services.
  4. Reduced Competitiveness: The policy reduced the competitiveness of Nigerian businesses, as it increased the cost of imports and reduced the value of the naira.

Conclusion

The CBN new forex policy 2018 was aimed at promoting economic growth, stability, and diversification in Nigeria. While the policy had both positive and negative impacts on the Nigerian economy, it generally improved the management of foreign exchange in Nigeria and promoted trade and commerce. However, it also led to an increase in inflationary pressure, devaluation of the naira, and increased cost of living.

References

  1. Central Bank of Nigeria. (2018). New Foreign Exchange Policy.
  2. Nigerian Economic Summit Group. (2018). The Impact of the CBN New Forex Policy on the Nigerian Economy.
  3. National Bureau of Statistics. (2018). Consumer Price Index.
  4. Federal Ministry of Finance. (2018). Budget of the Federal Republic of Nigeria.

PDF Document

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Please note that the PDF document is subject to change and may not reflect the current policies and regulations of the CBN and other relevant authorities.