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CBN’s Move to Scrap FX Price Verification System will Stabilize Market -Rewane

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Bismarck Rewane, CEO of Financial Derivatives, has commended the Central Bank of Nigeria (CBN) for discontinuing the Price Verification System (PVS) portal, stating that it signifies the achievement of the bank’s objectives.
 Rewane made this statement on Channels Television’s ‘Business Morning’ show on Thursday.
The CBN had announced the discontinuation of the FX PVS portal on June 26, which was introduced almost a year ago to validate Form M applications for importing physical goods into Nigeria.
Rewane believes that the portal’s discontinuation indicates that Nigeria’s FX rates harmonization has been successful, eliminating the incentive for round-tripping foreign currency due to marginal differences between the official and parallel markets.
Hear him:”it makes sense to over-invoice imports and under-invoice exports, now there is no fear of that because the difference between the official market and parallel is N10-N15, and there is no incentive for round tripping,” he said.

“By removing the price verification system document, you are making it easier for goods to come into Nigeria. It is a good move.

“What the Central Bank of Nigeria is saying in essence is that there is no incentive for arbitrages as long as the price differences at the two markets are narrow.

“As a matter of fact, to all intents and purposes, we can say there is exchange rate unification in Nigeria today (Thursday).

“There is one rate because the difference between one and the other is marginal. It is an efficient move; it makes the market more transparent.

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“As time goes on, this difference will narrow to almost zero. It is good news for the foreign exchange market. I think we will see some stability in the market now.”

The economist also praised the unification of the official and parallel FX markets rates, considering it a triumph. The discontinuation of the PVS portal marks a significant milestone in the CBN’s efforts to stabilize and harmonize the country’s foreign exchange market.

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