MANAGEMENT OF FOREIGN EXCHANGE BY CENTRAL BANK OF NIGERIA PROBLEMS AND PROSPECTS


MANAGEMENT OF FOREIGN EXCHANGE BY CENTRAL BANK OF NIGERIA PROBLEMS AND PROSPECTS

ABSTRACT

          This project deals with foreign exchange management in Nigerian by the central bank of Nigeria (CBN).  The need to manage  foreign exchange became imperative as a result of disequilibrum in the foreign exchange reserves.  The concept, foreign exchange management is a Conscious attempt to harness foreign exchange resources, deploy them to service the economy so as to prevent the economy for experiencing shocks due to foreign exchange volatility.

The central focus of this project is to examine how central bank of Nigeria (CBN)  through its policy measures manages foreign exchange in the country.  To carryout this project, the researcher made use of both primary and secondary data.  Questionnaires were also distributed to officials of the Central Bank of Nigeria (CBN). The questionnaires were in line with the objectives of the study.  

Based on the objectives of the  study, the findings reveals that.  The role of central Bank of Nigeria (CBN) in managing foreign exchange is not impressive, the impact of exchange is not encouraging  the activities of parallel market operators negatively affect the effective operation of the  foreign exchange management, the impact of foreign exchange decree No 17 of 1995 and other control measures in managing foreign in the country is not impressive and redirection of funds obtained from the official market to parallel market by banks is a problems militating against foreign exchange management.

 TABLE OF CONTENT

Title page                                                              i

Approval page                                                        ii

Dedication                                                             iii

Acknowledgement                                                  iv

Abstract                                                                v

Table of content                                                     vi

CHAPTER ONE

INTRODUCTION

1.1      Background of the study                                   1

1.2      Statement of the problem                                 4

1.3      Objectives of the study                                     5

1.4      Research questions                                          5

1.5      Significance of the study                                   6

1.6      Scope of the study                                           7

1.7      Limitation of the study                                     7

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1   Definition of foreign exchange                                        8

2.2  Foreign exchange in Nigeria                                      11

2.3  Structure of Nigeria’s foreign exchange market           15

2.4  Growth of the market exchange in Nigeria                  16

2.5    Foreign exchange market and monetary manage in Nigeria        20

2.6  The structure of the country’s output                        22

2.7  Overview of the Nigerian exchange rate policy            24

2.8  The efficacy of monetary policies in the management of firms                                                                                28

2.9  Foreign exchange management objectives and policy   33

2.10  Foreign exchange problems                                      37

2.11  Foreign exchange control                                                39

CHAPTER THREE

METHODOLOGY

3.1 Design of the study                                                            41

3.2 Area of the study                                                                       42

3.3      Population of the study                                                    42

3.4 Sampling  Method                                                             43

3.5 Research Instrumentation                                                        44

3.6   Validity and Reliability of the Instrument                                45

3.7      Sources  of Data                                                              46

3.8      Analytical Technique                                                       48

CHAPTER FOUR

PRESENTATION AND ANALYSIS DATA

4.1Data analysis                                                           49

CHAPTER FIVE

SUMMARY OF FINDINGS, RECOMMENDATION AND CONCLUSION

5.1  Summary of Findings                                              61

5.2  Conclusion                                                             62

5.3  Recommendation                                                    63

Bibliography                                                           64

Appendix I                                                             69

Appendix II                                                            70

CHAPTER ONEINTRODUCTION1.1   BACKGROUND TO THE STUDYIt has already been stated that money is a common denominator in which the rate relative values of goods and services can be expressed.  Throughout history, any community which forms itself into a nation for the purpose of self-government immediately introduces its own distinctive unit of account-monetary unit of account (legal tender). In the words of Endel (2013) in the international realm, no legal tender exists vales must be measured, accounts kept and payments made by conversion of one currency, not another, this conversion process is known as foreign exchange. Foreign exchange can be acquired by a country through the export of goods and services, direct investment inflows, aids, and grants.  When foreign exchange receipts, the surplus is added to reserves.  These reserves which are also savings from foreign exchange transactions are held by the authorities to finance shortfalls in foreign receipts and to safeguard the international value of the domestic currency.When there is disequilibrium in the foreign exchange market which is caused by an adequate supply of foreign exchange reserves, pressure may be exerted on foreign exchange reserves.  If the reserves are not adequate, it will deteriorate into the balance of payments problems, hence the  need to manage a nation’s foreign exchange resources so as to reduce the adverse effect of foreign exchange volatility. The management of foreign exchange resources is further informed by the need to set an appropriate cleaning price in the foreign exchange market. Therefore the act of foreign exchange management in a conscious attempt to harness foreign exchange resources, deploy them to service the economy so as to prevent the economy from experiencing shocks due to foreign exchange volatility.“The practice of managing the foreign exchange resources has therefore evolved broadly in line with the globalization and liberalization of economics and financial markets”.  (Anifowose, 2017)1.2      STATEMENT OF THE PROBLEMThe primary objective of foreign exchange management is to reduce foreign exchange instability and its adverse effect on the economy. Despite government efforts to achieve this objective through the central bank of Nigeria (CBN), foreign exchange (monitoring and miscellaneous provisions) Decree No promulgated in 1995 and the introduction of the use of forms  A and 19 in 1996, a handful of problems are still identified with foreign exchange operations in Nigeria.  These problems include(i)    Inadequate inflow of foreign exchange(ii)   Continuous depreciation in the value of the Naira(iii)   Balance of payment problems(iv)   Problem of finding Sectorial allocation of foreign exchange in the foreign exchange market1.3      OBJECTIVES OF THE STUDYThe objectives of the study are:(i)   To examine the roles of the central bank of Nigeria in managing the country’s foreign exchange(ii)   To examine the impact of foreign exchange rate policy in foreign exchange management.(iii)   To examine the effects of the activities of the parallel markets on foreign exchange.(iv)   To examine the impact of foreign exchange decree No. 17 of 1995 and other control measures in managing foreign exchange in the country.(v)   Examine the problems facing exchange management in Nigeria.1.4   SIGNIFICANCE OF THE STUDY(i)   This work is in partial fulfillment of the requirement for the award of Higher National Diploma (HND) in Accountancy.(ii)   The work will be an immense help to future researchers who will make their own investigation into this subject area.(iii)  The work will help the Central Bank of Nigeria (CBN) regulate the activities of the banks with a view to gathering them to fund the foreign exchange market adequately, increase foreign exchange inflow and Balance of payment surplus, determine a realistic exchange rate, and adequate foreign exchange control system.1.5      RESEARCH QUESTION(i)   How do you assess the role of the central bank of Nigeria in managing the country's foreign exchange.(ii)   Do you think that the impact of foreign exchange rate policy has been encouraging?(iii)   Is it true that the activities of the parallel market operators negatively affect the effective operation of the foreign exchange management in Nigeria?(iv)   How would you assess the impact of foreign exchange decree No 17 of 1995 and other control measures in managing foreign exchange in the country?(v)   What are the problem facing foreign exchange management in Nigeria.1.6   HYPOTHESISThe following hypothesis is have been designed for analysis:(i)     Ho:  The role of the Central Bank of Nigeria in managing the country’s foreign exchange is not impressive.          Hi:   The role of the Central Bank of Nigeria in managing the country’s foreign exchange is impressive.(ii)    Ho:   The impact of exchange rate policy in the management of foreign exchange in Nigeria is not encouraging.        Hi:    The impact of foreign rate policy in the management of foreign exchange in Nigeria is encouraging(iii)   Ho:   The activities of the parallel market operators negatively affect the effective operation f the foreign exchange management in Nigeria.        Hi:    The activities of the parallel market operator do not negatively affect the effective operative of the foreign exchange management in Nigeria.(vi)    Ho:   The impact of foreign exchange degree No 17 of 1995 and other control measures in managing foreign exchange in the country is not impressive.         Hi:    The impact of foreign exchange decree No 17 of 1995 and other control measures in managing foreign exchange in the country is impressive.1.6      SCOPE AND LIMITATION SCOPE The area of this project in Enugu, the research is to determine how foreign exchange could be effectively managed in Nigeria by CBN.LIMITATIONIn the process of carrying out this study, the researcher encountered some problems which include:  Finance the cost of transportation to the area where data are to be collected was too high.   The negative attitude of CBN officials toward the disclosure of information was a limiting factor. Finally, time for data collection and attitude lectures was a limiting factor.1.8   DEFINITION OF TERMSEXCHANGE RATE:   This is the number of units of one currency, which exchange for a given number of units of another country.FOREIGN EXCHANGE MARKET:   This is a market in which one national currency is brought in exchange for another national currency.FOREIGN EXCHANGE RESERVE:   These are foreign currencies held by the Central Bank of Nigeria (CBN).               REFERENCESi.   ANIFOWOSE O. K (2017)  “Management of foreign exchange A peep into the Next Decade”  CBN BULLION: Vol. 21, No 4.ii.  Endel, J.  k (2013)   International Business Enterprise 2nd Ed. London: Prentice hall Int. Inc.iii. Ude M. O (2016)   International Trade and Finance Enugu. John Jacob’s classic.

.

MANAGEMENT OF FOREIGN EXCHANGE BY CENTRAL BANK OF NIGERIA PROBLEMS AND PROSPECTS



TYPE IN YOUR TOPIC AND CLICK SEARCH.




TESTIMONIES FROM OUR CLIENTS


Please feel free to carefully review some written and captured responses from our satisfied clients.

  • "Exceptionally outstanding. Highly recommend for all who wish to have effective and excellent project defence. Easily Accessable, Affordable, Effective and effective."

    Debby Henry George, Massachusetts Institute of Technology (MIT), Cambridge, USA.
  • "I saw this website on facebook page and I did not even bother since I was in a hurry to complete my project. But I am totally amazed that when I visited the website and saw the topic I was looking for and I decided to give a try and now I have received it within an hour after ordering the material. Am grateful guys!"

    Hilary Yusuf, United States International University Africa, Nairobi, Kenya.
  • "Researchwap.com is a website I recommend to all student and researchers within and outside the country. The web owners are doing great job and I appreciate them for that. Once again, thank you very much "researchwap.com" and God bless you and your business! ."

    Debby Henry George, Massachusetts Institute of Technology (MIT), Cambridge, USA.
  • "I love what you guys are doing, your material guided me well through my research. Thank you for helping me achieve academic success."

    Sampson, University of Nigeria, Nsukka.
  • "researchwap.com is God-sent! I got good grades in my seminar and project with the help of your service, thank you soooooo much."

    Cynthia, Akwa Ibom State University .
  • "Great User Experience, Nice flows and Superb functionalities.The app is indeed a great tech innovation for greasing the wheels of final year, research and other pedagogical related project works. A trial would definitely convince you."

    Lamilare Valentine, Kwame Nkrumah University, Kumasi, Ghana.
  • "Sorry, it was in my spam folder all along, I should have looked it up properly first. Please keep up the good work, your team is quite commited. Am grateful...I will certainly refer my friends too."

    Elizabeth, Obafemi Awolowo University
  • "Am happy the defense went well, thanks to your articles. I may not be able to express how grateful I am for all your assistance, but on my honour, I owe you guys a good number of referrals. Thank you once again."

    Ali Olanrewaju, Lagos State University.
  • "My Dear Researchwap, initially I never believed one can actually do honest business transactions with Nigerians online until i stumbled into your website. You have broken a new legacy of record as far as am concerned. Keep up the good work!"

    Willie Ekereobong, University of Port Harcourt.
  • "WOW, SO IT'S TRUE??!! I can't believe I got this quality work for just 3k...I thought it was scam ooo. I wouldn't mind if it goes for over 5k, its worth it. Thank you!"

    Theressa, Igbinedion University.
  • "I did not see my project topic on your website so I decided to call your customer care number, the attention I got was epic! I got help from the beginning to the end of my project in just 3 days, they even taught me how to defend my project and I got a 'B' at the end. Thank you so much researchwap.com, infact, I owe my graduating well today to you guys...."

    Joseph, Abia state Polytechnic.
  • "My friend told me about ResearchWap website, I doubted her until I saw her receive her full project in less than 15 miniutes, I tried mine too and got it same, right now, am telling everyone in my school about researchwap.com, no one has to suffer any more writing their project. Thank you for making life easy for me and my fellow students... Keep up the good work"

    Christiana, Landmark University .
  • "I wish I knew you guys when I wrote my first degree project, it took so much time and effort then. Now, with just a click of a button, I got my complete project in less than 15 minutes. You guys are too amazing!."

    Musa, Federal University of Technology Minna
  • "I was scared at first when I saw your website but I decided to risk my last 3k and surprisingly I got my complete project in my email box instantly. This is so nice!!!."

    Ali Obafemi, Ibrahim Badamasi Babangida University, Niger State.
  • To contribute to our success story, send us a feedback or please kindly call 2348037664978.
    Then your comment and contact will be published here also with your consent.

    Thank you for choosing researchwap.com.