Deposit money banks have witnessed an increase in foreign exchange demand due to the central bank’s ban of forex sale to Bureaux De Change (BDCs).
This was disclosed by CBN deputy governor, Adamu Edward Lametek in his statement at the last Monetary Policy meeting.
He stated that the naira exchange rate has remained stable since the last adjustment at the I&E window, despite tight liquidity management and a recent change in the foreign exchange (FX) management approach.
Adamu stated that there has been a halt to the rapid depreciation seen in the black market. He said, “The initial panic-driven depreciation at the parallel market has gradually given way to real market forces.”
He also stated that the CBN ban has successfully shifted the FX demand to the DMB’s.
“Apparently, the revised FX management strategy, which excludes BDCs from direct sales, is working as a substantial share of FX demand has migrated to the DMB’s window. We should expect this pattern to continue in the coming months as confidence in the modified framework grows,” he said.
He added “Overall, I figured out that the primary purpose of the policy at this point would be to preserve and possibly deepen the relative stability the economy has started to record. The current monetary policy configuration continues to be relevant in my view.”
He also stated that despite the positive outcomes so far on inflation and growth, the economy is yet to attain the pre-pandemic level on several fronts. Employment, for instance, continues to be a major policy concern.