ACCA Supports CBN’s Decision to Remove Currency Peg

The Association of Chartered Certified Accountants (ACCA) has welcomed the decision by the Central Bank of Nigeria (CBN) to introduce a foreign exchange regime that seeks to liberalise the exchange rate market.

But the global accountancy body, in a statement monday said it was keen to ensure the policy decision results in economic stability, and also trading transparency.

ACCA’s Head of Policy for Sub Saharan Africa, Jane Ohadike said “part of the objective of the new framework includes the introduction of the naira to be settled over the counter (OTC) FX futures market. The aim is to encourage people to plan their future foreign exchange requirements through the use of various hedging instruments as opposed to the current situation where businesses tend to front-load or hoard FX due to uncertainty.

“Accountants need to be abreast of the peculiarities of the rules and regulations surrounding the new FX policy as many of their clients, large and small, will be taking FX positions that could impact on the reporting of their accounts.”

Ohadike further said: “It’s a given that any economic policy intervention will have an effect, and the central bank has shown optimism that the naira will settle at N250 to the dollar, and anticipates a period of weakness following floatation on Monday 20 June when market forces will clearly come into play.

“However, we are pleased to see in the Bank’s policy update that there are clear guidelines on effective monitoring of the FX market with all authorised dealers and end-users being required to trade only on FMDQ-advised FX Trading Systems. Compliance is clearly important.”

On her part, the Head of ACCA Nigeria, Toyin Ademola said on behalf of ACCA’s members, the association would be watching developments closely – especially in relation to black market trading. “We have to ask what the long term effect of this change will mean – will it curtail black market trading and will it help the economy to grow and deal with the deficit? As we have seen with other currency fluctuations – such as the ringgit in Malaysia – there are risks facing businesses when currency volatility reigns – in this 24/7 connect world, business in Nigeria could be affected even if they don’t trade overseas,” Ademola added.