Independent sources now control forex price cbn

A very interesting topic!

You're referring to the notion that independent sources, rather than the Central Bank of Nigeria (CBN), now control the foreign exchange (forex) price in Nigeria. This is a topic of much debate and controversy in Nigeria's financial circles.

To provide some context, the CBN is responsible for managing Nigeria's foreign exchange reserves and setting the official exchange rate. However, in recent years, the CBN has faced challenges in maintaining a stable exchange rate due to various factors, including:

  1. Inflation: High inflation rates have eroded the purchasing power of the naira, leading to a decline in its value.
  2. Oil price volatility: Nigeria's economy is heavily reliant on oil exports, and fluctuations in global oil prices can impact the value of the naira.
  3. Capital flight: Nigeria has experienced significant capital flight in recent years, which has put pressure on the naira.
  4. Dollar scarcity: The CBN has struggled to maintain a stable supply of foreign exchange, leading to shortages and high demand.

In response to these challenges, the CBN has implemented various measures to manage the foreign exchange market, including:

  1. Introducing a flexible exchange rate regime: The CBN has moved away from a fixed exchange rate regime to a more flexible one, allowing the naira to float against other currencies.
  2. Introducing a multiple exchange rate system: The CBN has introduced multiple exchange rates to reflect different market conditions, including a official rate, a interbank rate, and a parallel market rate.
  3. Increasing foreign exchange supply: The CBN has increased its foreign exchange supply through various means, including auctions and sales to banks.

Despite these efforts, the CBN has faced criticism for its management of the foreign exchange market. Some argue that the CBN's actions have led to a lack of transparency and accountability in the foreign exchange market, allowing independent sources to influence the price of the naira.

Independent sources, such as:

  1. Bureaux de Change (BDCs): These are private companies that buy and sell foreign currencies. They have been accused of manipulating the foreign exchange market and influencing the price of the naira.
  2. Online forex platforms: These platforms allow individuals to buy and sell foreign currencies online. They have been accused of facilitating illegal activities, such as money laundering and terrorism financing.
  3. Illegal foreign exchange operators: These are individuals or companies that operate outside of the law, buying and selling foreign currencies illegally.

These independent sources have been accused of influencing the price of the naira by:

  1. Hoarding foreign exchange: They may hoard foreign exchange, leading to shortages and high demand, which can drive up the price of the naira.
  2. Manipulating the market: They may manipulate the foreign exchange market by buying and selling foreign currencies at inflated prices, which can drive up the price of the naira.
  3. Engaging in illegal activities: They may engage in illegal activities, such as money laundering and terrorism financing, which can undermine the stability of the foreign exchange market.

In conclusion, while the CBN is still responsible for managing Nigeria's foreign exchange reserves and setting the official exchange rate, independent sources have indeed gained significant influence over the foreign exchange market. The CBN has faced criticism for its management of the foreign exchange market, and there is a need for greater transparency and accountability to ensure a stable and efficient foreign exchange market.