International and domestic oil companies, and those providing related services, are now to sell fx to the Central Bank of Nigeria instead of the NNPC. The aimed is to realign the fx policy with new reality as the corporation in charge of marketing the nation’s most valuable resource is no longer able to attract sufficient dollar to shore up the inflow of external reserve.
The consequences of Nigeria’s overt dependence on the oil market for fx receipts are noted in the present decline in the market. Oil receipts affect the depth of the external reserve which in turn impact the health of the Naira.
FBN highlighted the current situation. It said, “Nigeria’s over-dependence on the oil market for its fx receipts exposes its foreign exchange market to oil price volatility.”
It added, “Oil receipts (including oil related taxes) contribute to external reserves. The crude oil price averaged US$27/b in April, compared with US$35/b in March”.
To curb the slide, the Central Bank of Nigeria has since directed oil companies to desist from selling fx to the NNPC. These firms will now sell to the apex bank instead. This directive and several other measures put in place by the Federal Government and relevant agencies are structured to manage the foreign exchange.
The Naira is trading N389.53 to $1. The benchmark Brent crude also rose 4.17% to sell at $34.11 per barrel, a cause for respite for a nation ravaged by the twin-problem of economic lockdown and a glut in global oil output.