Forex crisis: CBN increases dollar supply, reverses cement restriction, and lifts 42 items

The Central Bank of Nigeria has stated that it is increasing dollar availability in the foreign currency market, while also lifting a prohibition on 43 commodities that were previously ineligible for FX in the official market.

Following criticism from international organizations and experts, the naira fell below $1,050/$ on the parallel market on Thursday.

Dailyupdates previously reported that, despite unifying exchange rates, the CBN maintained the status quo on the 43 non-eligible commodities barred from the forex market introduced by former governor Godwin Emefiele.

Between 2016 and 2022, Nigerians imported at least nine commodities worth N18.12 trillion from the CBN’s FX prohibition list.

Items such as crude palm oil, vegetable products, animal products, meat, vegetable fats and oil, steel products, rubber, plastic, clothes, and textiles were imported from various countries, according to an analysis of Nigerian Foreign Trade reports from 2016 to 2022.

According to a different source, despite the CBN’s inability to provide cash for banned commodities, Nigerians imported five items totaling N543 billion in the first quarter of 2023.

However, various economic experts and organizations have consistently urged the CBN to lift the currency limitations.

Citigroup stated earlier this week that if the nation wanted to address the problems with the forex market, the CBN’s limits on foreign exchange provisions for 43 products had to be lifted.

Credit expert Ayso van Eysinga stated this in the CEEMEA Frontier Credit Market Commentary after visiting Nigeria.

Van Eysinga noted that it was necessary to loosen limitations on the 43 goods in addition to resolving the backlog of FX demand.

Additionally, the World Bank encouraged the CBN to abandon its forex limitation policy in its Nigeria Development Update (June 2023). This, according to the report, would supplement efforts to lower inflation through a carefully planned combination of monetary, fiscal, and trade initiatives.