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The Central Bank of Nigeria’s recent forensic audit of FX forward contracts, conducted by Deloitte, marks a significant milestone in the country’s efforts to regulate and oversee the foreign exchange market. While the CBN has been actively involved in implementing guidelines for FX derivatives and modalities for CBN FX forwards, this audit is notable for its comprehensive investigation into all outstanding and undelivered FX forward contracts under the Retail Secondary Market Intervention Sales scheme.The audit’s findings, which uncovered significant irregularities such as mismatches in beneficiary identities, inflated FX requests, and unapproved imports, highlight the need for stricter oversight and enforcement. By identifying and addressing these irregularities, the CBN aims to safeguard Nigeria’s foreign exchange reserves, promote market discipline, and ensure fairness among market participants.The CBN’s commitment to transparency and accountability is evident in its decision to reimburse affected parties in naira for invalid contracts and pursue legal action against parties found to have violated FX rules. This audit has the potential to inform future regulatory decisions, deter potential market abuse, and restore confidence in the FX market.Overall, the CBN’s forensic audit of FX forward contracts demonstrates its dedication to maintaining the integrity of the foreign exchange market and promoting economic stability. By taking proactive steps to address irregularities and enforce market discipline, the CBN can help ensure a more transparent and accountable FX market, which is essential for Nigeria’s economic growth and development.
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