CBN Reform Has Stabilised Forex Market, Say Operators


By Obinna Chima


The banking sector reforms embarked upon by the Central Bank of Nigeria (CBN) has brought about stability in the foreign exchange market, some participants in the currency market have said.The operators, who reviewed the effect of the apex bank sanitisation, one year after, spoke in separate interviews with THISDAY at the weekend. They argued that the action had saved the economy from imminent danger.


The Governor of the CBN, Mallam Sanusi Lamido Sanusi, had in the first phase of the reform on August 14, 2009, relieved the Managing Directors/Chief Executive Officers of Afribank Plc, Intercontinental Bank Plc, Oceanic Bank International Plc, Union Bank Plc and Finbank Plc, of their plum job. 


The Governor, who thereafter authorised the injection of a total of N420 billion into the aforementioned banks, had based his action on the fact that the banks were in ‘grave situation’.
Managing Director and Chief Executive Officer, Slamad Bureau De Change Limited, Mr. Amanze Olisaemeka, stressed that the move by the regulator has stabilised the foreign exchange market.


He said, “The CBN has done a great job in the sense that the difference between the official rate and the parallel market rate is not more than 50 kobo. For instance, banks are selling dollar at the rate of N151.10 to a dollar, whereas the parallel market is selling N151.20 kobo to a dollar. With that, the CBN has achieved parity. It has bridged the gap in the foreign exchange market.”


He further argued that the reform has further strengthened investors’ confidence in the industry. The forex dealer added, “The banks were undressed in public and we were able to see their true position after all the years they have been panel beating their annual reports and results and creating false impression about them. So that has brought about transparency and accountability, which is the bedrock of the policy of the Federal Government. So the CBN has been able to achieve that. 


“We can now see that we are beginning to see the financial statement of these banks in their true form. Gradually, confidence is building again in the banking sector. You can see that from the first and second quarter results of most of these banks, as they are now making profit again.”


However, while the Head of Research, BGL Securities Limited, Mr. Femi Ademola, declared that the CBN’s intervention has brought down interest rates, he still faulted the manner in which the exercise was carried out. He stated that the action has also ensured that none of the affected banks collapsed.According to him, some of the problems that were diagnosed by the CBN Governor on assumption of office were as a result of the lapses by the regulators. He added, “Every where in the world, everybody would agree that the banking system is the barometer of the development of any economy, and so we can’t afford to have any bank failure because of the multiplier effect.”





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