CBN refutes story on Forex arbitrage

…Forex exchange rates geared towards convergence not arbitrage

By Chioma Obinagwam

The Central Bank of Nigeria (CBN), Nigeria’s apex bank has dismissed the report alleging foreign exchange (Forex) arbitrage in the country. The apex bank reacted in a statement signed by the bank’s Director, Corporate Communications, Isaac Okorafor.

Investopedia, a website based in New York City that focuses on investing, finance education and analysis, defines Arbitrage as the simultaneous purchase and sale of an asset to profit from an imbalance in the price. It is a trade that profits by exploiting the price differences of identical or similar financial instruments on different markets or in different forms.

The CBN said, ‘The Central Bank of Nigeria (CBN) has been alerted on the frontpage headline story in the BusinessDay newspaper on Monday, February 4, 2019 titled:
“Exposed The Sleazy Face of N306/$, inside Nigeria’s racket where faceless agents pocket over N32bn annually”. The management of the CBN wishes to react to the report wherein BusinessDay newspaper alleges that faceless agents in Nigeria are exploiting the country’s multiple exchange rates to devastating effects and allegedly with the backing of regulators.’

“The CBN wishes to state unequivocally that this report is unfounded and untrue and challenges BusinessDay to provide the names and also verifiable evidence of collusion between these faceless agents and officials of the CBN, who are working to perpetuate these so called Fx racket schemes. We would also urge the management of BusinessDay to contact the CBN prior to making such spurious allegations, as we were denied the benefit of responding to this article,” it disclosed in the statement.

The apex bank further stressed that the Forex rates across various markets governed and regulated by the it, have been converging, leaving no room for arbitrage opportunities in Nigeria’s forex market.

The CBN, however, reaffirmed its commitment at ensuring stability in Forex market.

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