The Chairman of the presidential committee on fiscal policy and tax reforms, Mr. Taiwo Oyedele said the federal government is planning to introduce new foreign exchange (FX) rules, including a crackdown on illicit currency trading.
Oyedele in an interview with Bloomberg on Monday, said the government hopes the reform will result in the naira closing its gap with the unofficial rate and reaching a “fair price” before the end of 2023.
He said the government plans to clear a backlog of dollar demand estimated at about $6.7 billion, bolster the naira forward market, and set transparent rules for the operations of the official market.
Oyedele, a former fiscal policy partner and Africa tax leader at PriceWaterhouseCoopers (PwC), said FG also aims to expand the official market to include all legitimate transactions while stifling the illicit “black market” for foreign currency.
“We think all of that will happen before December, and maybe in a matter of a couple of weeks we will begin to see the results, such that before the end of the calender year, naira should find its true value, not the one that is being done currently in the parallel market,” Oyedele said.
He added that the government sees a “fair price” for the dollar at “N650 to N750”.
Oyedele said the divergence between the official and parallel market rates “means you are sucking liquidity and supply from the official market to the parallel market, because everyone wants the premium”.
On October 23, 2023, the Minister of finance and coordinating minister of the economy, Wale Edun, said Nigeria expects $10 billion in foreign currency inflows in the next few weeks to ease liquidity in the foreign exchange market.
On Monday, the naira appreciated further at the parallel section of the market to N1,150 a dollar.
Meanwhile, the local currency appreciated by 5.68 percent at the official market to close at N789.94 to the dollar on Friday — from N837.49/$ on Thursday.