The Central Bank of Nigeria (CBN) has warned authorized dealers to ensure that transactions in the forex market are conducted transparently and any form of price distortion leading to market manipulation will face sanctions.
The apex bank disclosed this in a statement by the Director of the Financial Market Department, Aliyu, M. Ashiru yesterday where it stated that investigations have revealed cases of underreporting of transaction rates and fixed income transactions.
According to the statement, the apex bank allows financial market transactions to be conducted on a “willing buyer, willing seller” basis.
It stated,
- “All Authorised dealers are reminded that the Central Bank of Nigeria (CBN) has permitted financial market transactions to be conducted on a ‘willing buyer, willing seller’ basis, and therefore expects prices to be quoted and displayed transparently”
- “The attention of the CBN has been drawn to the practice of authorized dealers (and their customers) in reporting inaccurate and misleading information on transactions concluded in the financial market. Ongoing investigations have revealed instances of underreporting of transaction rates and practice of second cheques on foreign exchange and fixed income transactions”
The lender of last resort further warned that such practices run counter to the ethics of proper financial market and will not be tolerated going forward.
It said,
- “Deliberate attempts to create price distortion by reporting false transaction details amounts to market manipulation which will not be tolerated and henceforth face sanctions”
What you should know
Yesterday, the CBN announced that it had cleared another tranche of $500 million of verified forex liabilities from its backlog estimated at $7 billion.
However, the action did not make much impact as the naira crashed to an all-time low of N1,348.63/$ on the official window representing a decline of 33.87% and almost kissing the parallel market rate.
On the unofficial window or parallel market, the naira depreciated by 2.76%, quoted at N1,450/$1.
