Bismarck Rewane, CEO of Financial Derivatives, has stated that the Central Bank of Nigeria (CBN) has successfully unified the official and parallel foreign exchange market rates. Rewane made this assertion during an interview on Channels Television’s business morning program on Thursday.
He highlighted that the discontinuation of the Price Verification System Portal by the CBN indicates the success of the forex rate harmonization. According to Rewane, the minimal difference between the official and parallel market rates, now only N10-N15, removes the incentive for FX currency round-tripping.
Rewane explained, “With the price difference between the official and parallel markets being marginal, there is no longer a reason to over-invoice imports or under-invoice exports. The removal of the price verification system simplifies the import process, reflecting the lack of arbitrage opportunities due to the narrow price differences.”
He further remarked that the unification of exchange rates has led to a single, more transparent market, predicting that the rate differences will continue to narrow, eventually reaching almost zero. This, he believes, will bring stability to the forex market.
Reports states that the CBN discontinued the PVS portal, which was launched in August of the previous year. This decision comes as the Naira traded at N1507.83 per dollar on Wednesday, slightly up from N1507.79 the previous day, while the parallel market rate remained stable at N1505 per dollar.
The CBN had floated the Naira on June 14 of the previous year to unify the exchange rates of the official and parallel markets.
