Nigeria’s Central Bank Blames Volatile Forex Market On ‘Seasonal Demand’ For Dollars

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The apex bank also stated it was not against the operation of fintechs and had not revoked the licence of any fintech organisation. However, the bank said there is a need to strengthen regulation in the sector to check against leakages.

The Central Bank of Nigeria has blamed the recent volatility of the country’s foreign exchange market on seasonal demand for dollars. 

This was stated at the 295th Monetary Policy Committee (MPC) meeting of the apex bank in Abuja on Tuesday. 

“Members further observed the recent volatility in the foreign exchange market, attributing this to seasonal demand, a reflection of the interplay between demand and supply in a freely functioning market system,” a communique issued by the committee on Tuesday stated. 

It continued: “Members observed that while year-on-year headline inflation in April 2024 rose moderately, the month-on-month measures of headline, food and core all declined significantly. 

“This follows a decline (month-on-month) of headline and food measures in March 2024, suggesting that the recent tight monetary policy stance of the Bank is beginning to yield the desired outcomes.

“Committee also noted the marginal increase in the external reserve balance between March and April 2024 and urged the Bank to sustain its focus on accretion to reserves. 

“The MPC commended the Bank for the recent approval of licenses of fourteen (14) international Money Transfer operators (IMTOS). This is expected to improve competition and lower the cost of transactions, thus attracting more remittances through formal channels.

“The Committee noted with satisfaction that the banking system remains safe, sound, and stable, despite the headwinds confronting the economy. It commended the recent recapitalization initiative and urged the management to sustain its regulatory oversight to ensure the continued stability of the banking system.”

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The apex bank also stated it was not against the operation of fintechs and had not revoked the licence of any fintech organisation. However, the bank said there is a need to strengthen regulation in the sector to check against leakages. 

The bank also stated that mobile money operators in the country including fintech firms like OPay, Palmpay, Kuda Bank, and Moniepoint would resume the enrolment of new customers in a few months.


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