The Central Bank of Nigeria (CBN) has asked all authorised dealers in the foreign exchange market to desist from reporting inaccurate and misleading information on transactions concluded in the financial market.
In a circular to all the market dealers, the central bank said ongoing investigations have revealed instances of underreporting of transaction rates and the practice of ‘second cheques’ on foreign exchange and fixed-income transactions.
The CBN had permitted financial markets transactions to be conducted on a ‘willing buyer willing seller’ basis, by which prices are expected to be quoted and displayed transparently. Many of the players in the market are reported to be flouting the order, thereby 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.
“This behaviour is not compliant with the ethical standards associated with a sound financial market, and deliberate attempts to create price distortions by reporting false transaction details amounts to market manipulation which will not be tolerated and will henceforth face sanctions,” acting director, financial markets department at the CBN, Aliyu Ashiru, said in a circular issued to all the market dealers yesterday.
The monetary authorities are employing various means to ensure the unification of the exchange.
Yesterday, the CBN said it had released $500 million to various sectors. This comes 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. He promised to ensure that the CBN expedites genuine price discovery in the near term.
He said the approach will contribute to a more balanced and stable exchange rate, adding that his administration will prioritise transparency and create 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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