On Thursday, the Naira declined across the board in the foreign exchange (FX) markets even as the Central Bank of Nigeria (CBN) finally raised the interest rate by 35. over 72% increase in dollar supply at the official market.
In this regard, the Central Bank of Nigeria took appropriate measures by stopping operations performed by street foreign exchanges known as “Bureau de Change.” New Rule: The current governor of the CBN, Olayemi Cardoso, said that street trading of foreign currencies will be banned, and the government has new regulations for operators.
Bureau de Change Operators Must Stop all Foreign Exchange Trading, CBN
The foreign exchange market is also experiencing a new look, especially in Nigeria, through the Central Bank of Nigeria (CBN)efforts. This new measure meant to enhance the stability of the BDC operators, has raised the minimum capital requirements considerably.
According to the new rules and regulations, Tier 1 BDCs should have at least ₦2 billion in their accounts, and Tier 2 operators should have at least ₦500 billion. CBN Governor Olayemi Cardoso argued that this move would enable BDCs to plow more funds into infrastructure, enabling them to meet the regulatory requirements as required.
The result of these changes was soon manifested in the foreign exchange market. Specifically, the Nigerian Naira depreciated against the US dollar. On Thursday, the local currency retreated by 1. 53.50 percent of its value, with the stock price reaching ₦1,485. 66. The Naira fared worse in the parallel market, closing at ₦1,515 to the dollar.
BDCs participate in Nigeria’s foreign exchange market, primarily engaging in small-scale FX deals that do not require a bank’s participation. That the central bank has sought to build these operators means it wants to be certain that they are operating from a position of strength.
While the Nigerian economy struggles with the contingencies brought by the instabilities in the Naira, the CBN appears to be trying to stabilize the entire country’s foreign exchange. It may not be smooth sailing, but these Herculean steps suggest the central bank’s desperation to steer the country’s financial boat through the storm.
Binance Exec’s Nigeria Court Appearance Stalled
Amid the problems observed on the Naira, another Binance official, Tigran Gambaryan, was detained and supposed to face the court but could not due to his poor health. He was not in court on Wednesday, May 23, regarding the tax evasion case he is facing after the judge declined his bail request, mentioning that there was a high possibility of his fleeing the country if granted bail.
The IMF also endorsed earlier this month Nigeria to adopt international cryptocurrency exchanges as the country needs to reform its economy and strengthen its market in Africa for cryptocurrency.
The fight that the Naira has put up is the story of Nigeria’s FOREX market, which has seen the Central Bank of Nigeria make significant efforts to start taking charge again. Amidst the changing scenario, the effects on the overall economy and the cryptocurrency market will continue to attract attention.
