By Oludare Mayowa
Two Central Bank of Nigeria (CBN) monetarists have asked the regulatory bank to put commercial banks under surveillance and monitor how they manage the foreign exchange allocation through them.
Both Adeola Adenikinju and Mike Obadan, members of the Monetary Policy Committee (MPC) said it would be tragic “if the sharp practices of the BDCs are relocated in the commercial banks.”
Adenikinji suggested that the regulatory bank should conduct investigation and study into the foreign exchange market operation in the country.
He said the CBN should conduct comprehensive study to determine the fundamental drivers and relative sizes of the segment so forex market in the country.
Adenikinju also said the CBN should monitor commercial lender’s to close loopholes for shady practices, collusion and round tripping in the forex market.
While Obadan said that In light of the recent foreign exchange policy measures, effective monitoring of the foreign exchange activities of the deposit money banks is of the essence.
READ ALSO: PDP governors in firm grip of main opposition party, to decide Presidential candidate
“It will be tragic if the sharp practices of the BDCs are relocated in the commercial banks,” Obadan stated.
They both also agreed that the CBN should boost confidence in the forex market by discountenance suggestions to nationalise forex remittances in domiciliary accounts of bank customers.
“The long-term interests of the country would be served by encouraging remittances and non-traditional exports.
“Hence, suggestions to nationalise remittances will be counterproductive to the economy in the long term. Nigerians should be encouraged to bring in their funds into the economy by removing any uncertainty around the ownership and management of such funds,” Adenikinju wrote in his personal note presented at the last MPC meeting.
Also, Obadan said against the backdrop of relatively improved foreign exchange reserves, the regulatory bank should consider augmenting supply to the foreign exchange market while also considering further demand management measures.
“On the exchange rate, the Bank should ignore the call by some stakeholders that the parallel market rate should guide the appropriate exchange rate in Nigeria.
“This suggestion has no basis. That market constitutes a negligible proportion of the foreign exchange market in Nigeria. Consequently, it cannot provide guidance on the appropriate exchange rate in the country.
“Rather, it is the equilibrium rate, as empirically determined, that should provide guidance on the appropriate level of the exchange rate,” Obadan also wrote in his MPC personal note.
