CBN Exchange Rate

CBN EXCHANGE RATE POLICY

The Central Bank of Nigeria is a major channel that determines the entire rate board of the other exchange rate channels. The Federal Republic of Nigeria charges the Bank with the overall control and administration of the monetary and financial sector policies of the Federal Government.

In a bid to strengthen the Naira, the Federal Government of Nigeria through the Central Bank continue to issue working foreign policies that would the economic growth in Nigeria. The cbn, saddled with the responsibility of safeguarding the international value of Naira, has recently changed the foreign policy which i jeered at ensuring the enhancement of the value of Nigeria’s legal currency – Naira. The roles of the CBN include to: sustain the external reserves of the country, uphold monetary stability and a sound financial environment, and to act as a banker of last resort and a financial adviser to the federal government. CBN is also responsible for nurturing money in financial institutions and the capital market.

The exchange of naira to other currencies is governed by the recent policies placed by the CBN. The present legal framework within which the CBN runs is the CBN Act of 2007 which repealed the CBN Act of 1991 and all its amendments. The CBN becomes a fully autonomous body in the discharge of its functions under the Act of 2007 and also the Banks and Other Financial Institutions Act, with the objective of promoting stability and continuity in economic management. The Act also widened the objectives of the CBN to include ensuring monetary, price stability and rendering of economic advice to the Federal Government.

The current CBN Governor is Mr. Godwin Emefiele, the former Zenith Bank Plc Chief Executive. He has held on to the core values of CBN and charged with the responsibility to “be proactive in providing a stable framework for the economic development of Nigeria, through effective, efficient, and transparent implementation of monetary and exchange rate policy, and management of the financial sector.”

The Central Bank of Nigeria (CBN) introduced a cashless policy in 2012 for the sole purpose of reducing the amount of physical amount in the country and encouraging more e-transactions. The former cashless policy stipulated a cash handling charge of 3% on daily cash withdrawals that is above N500,000 for individuals; while a charge of 5% is for corporate bodies above N3,000.000. It was also noted that withdrawal above N150,000 on all third party cheques can only receive value through a clearing house and not across the counter, the licensed cash in transit companies are only permitted to pick up cash service while banks are not; and the charges on cash transactions made are borne by the account holders. This policy has led to a massive success in the handling of e-transactions today. It has ensured a more efficient payment system and also promoted a fast and reliable financial system in Nigeria.

History of the Central Bank of Nigeria

The Central Bank of Nigeria came into being on the 1st of July, 1959 after an Act was presented to the House of Representatives in March, 1958 under the administration of G. D. Paton. Between the period of 1892-1952 when the colonial administration ruled Nigeria, inquiry was made to investigate the banking practices in Nigeria. The G. D. Paton Report on the banking system in Nigeria was presented to ensure a more organized system of monetary transactions made in commercial banks, thereby, preventing fraud.

In the month of April, 1960, the Central Bank issued its very first treasury bills. Not very long, the Bank introduced the Lagos Bankers Clearing House, which gave licensed banks a framework to exchange and clear checks in May, 1961. In July, 1961, the Central Bank had fully implemented the issuance of all denominations of new Nigerian notes and coins; and also redeemed all of the West African Currency Board’s previous money.

The 1991 Decrees 25 and 25 of the Banks and Other Financial Institutions (BOFI) repealed the Decree of 1969 that guided banking practices, and its amendments. The 1991 Decree was enacted to strengthen and extend the powers of CBN in order to improve the effectiveness of monetary policy; and the regulation and supervision of banks in the country. However, in 1997, the Federal Government of Nigeria enacted the CBN Decree No. 4 in 1997 (amendment Decree No.3 and BOFI Decree No. 4 (amended)) to remove completely the limited autonomy which the Bank had since 1991. This decree gave the Ministry of Finance a higher role and the CBN with a lesser role in monitoring of the financial institutions, leaving little room for the Bank to exercise discretionary powers.

However, the BOFI (Amendment) Decree No. 40 of 1999 gives provisions relating to failing banks applicable to other financial institutions. It also empowers the Governor of the CBN to remove any manager or officer of a failing bank or other financial institution.

The Past and Present Governors of the Central Bank of Nigeria (CBN)

1. Roy Pentelow Fenton (24 July 1958- 24 July 1963)
2. Alhaji Aliyu Mai Borno (25 July 1963- 22 June 1967)
3. Dr. Clement Nyong Isong (15 August 1967-22 September 1975)
4. Mallam Adamu Ciroma (22 September 1975- 28 June 1977)
5. Ola Vincent (28 June 1977-28 June 1982)
6. Alhaji Abdulkadir Ahmed (28 June 1982-30 September1993)
7. Dr. Paul Agbai Ogwuma (1 October 1993- 29 May 1999)Chief Joseph Oladele Sanusi (29 May 1999- 29 May 2004)
8. Prof Charles Chukwuma Soludo (29 May 2004- 29 May 2009)
9. Sanusi Lamido Aminu Sanusi (3 June 2009- 20 February 2014)
10. Mr Godwin Emefiele (June 3 2014 - till date)