The Central Bank of Nigeria (CBN) has warned all authorised dealers in the foreign exchange market against reporting inaccurate and misleading information on transactions concluded in the financial market.
In a circular to all market dealers, the central bank stated that ongoing investigations have revealed instances of underreporting transaction rates and the practice of “second checks” on foreign exchange and fixed-income transactions.
The CBN had allowed financial market transactions to be conducted on a “willing buyer willing seller” basis, where prices are expected to be quoted and displayed transparently. However, many players in the market are reportedly flouting this order, causing distortions in the market.
“The attention of the CBN has been drawn to the practice of Authorised Dealers (and their customers) in reporting inaccurate and misleading information on transactions concluded in the financial market,” said Aliyu Ashiru, acting director of the financial markets department at the CBN, in a circular issued to all market dealers on Monday.
“This behaviour is not compliant with the ethical standards associated with a sound financial market. Deliberate attempts to create price distortions by reporting false transaction details amount to market manipulation, which will not be tolerated and will henceforth face sanctions,” Ashiru added.
The monetary authorities are employing various means to ensure the unification of the exchange rate. On Monday, the CBN announced it had released $500 million to various sectors. This came barely a week after the bank paid approximately $2.0 billion to settle outstanding commitments across the manufacturing, aviation, and petroleum sectors.
CBN Governor Olayemi Cardoso believes that the naira is currently undervalued and has promised to expedite genuine price discovery in the near term. He stated that this approach would contribute to a more balanced and stable exchange rate. Cardoso emphasised his administration’s priority on transparency and creating a market environment that enables the fair determination of exchange rates, ensuring stability for businesses and individuals alike.
Ashiru told the market dealers that the CBN remains committed to a transparent and well-functioning financial market and encourages all stakeholders to carry out their legitimate business in compliance with the rules and guidelines as published by the CBN.
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