The Central Bank of Nigeria (CBN), on Sunday, clarified that the recent policy changes introduced in the country’s foreign exchange (FX) market were meant to promote transparency, liquidity, and price discovery in the market in order to improve supply, discourage speculation, enhance customer confidence, as well as ensure overall stability in the FX market.
CBN also announced that going forward domiciliary account holders were permitted to utilise cash deposits not exceeding $10,000 per day or its equivalent via telegraphic transfer.
CBN Director, Corporate Communications Department, Dr. Isa Abdulmumin, in a statement issued after an extraordinary Bankers’ Committee meeting held over the weekend, explained that all visible and invisible transactions, including medicals, school fees, Business Travel Allowance (BTA), Personal Travel Allowance (PTA), airline, and other remittances, were eligible for the Investors’ and Exporters’ (I & E) window.
As a result, Abdulmumin said banks shall ensure expeditious processing of all eligible invisible transactions on behalf of their customers using the applicable rate at the I & E window.
The central bank director pointed out that the meeting had discussed the policy implementation and implications for the banking public.
Abdulmumin further explained that ordinary domiciliary account holders shall have unfettered and unrestricted access to funds in their accounts. He said Deposit Monet Banks (DMBs) shall provide returns to the CBN, including the “purpose” for such transactions.
The CBN director added that cash deposits into domiciliary accounts would not be restricted, subject to DMBs conducting proper Know-Your-Customer (KYC), due diligence, and adhering to the spirit and letter of extant Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) laws and other relevant rules and regulations.
Abdulmumin also said the apex bank would prioritise orderly settlement of any committed FX forward transactions as they fell due in order to boost market confidence. He added that the central bank would normalise its Cash Reserve Ratio (CRR) maintenance processes and ensure equity in its implementation across the banking industry.
He said, “The CBN will continue to engage stakeholders and issue further guidance as it implements the on-going reforms.”
The CBN last week abolished segmentation in the FX market and collapsed all rates into the I&E window.
The central bank gave the directive in a circular titled, “Operational Changes to the Foreign Exchange Market,” signed by its Director, Financial Markets, Dr. Angela Sere-Ejembi, dated June 14, 2023.
The I&E FX window is the market trading segment for investors, exporters and end-users that allows for FX trades to be made at exchange rates determined based on prevailing market circumstances, thus, ensuring efficient and effective price discovery in the Nigerian FX market. The FX window was established by the CBN in 2017.
CBN had, in the same circular, pointed out that applications for medicals, school fees, BTA/PTA, and Small and Medium Enterprises (SMEs) would continue to be processed through deposit money banks, just as it announced the re-introduction of the “Willing Buyer, Willing Seller” model at the I&E window.
The apex bank stated, “Operations in this window shall be guided by the extant circular on the establishment of the window, dated 21 April 2017 and referenced FMD/DIR/CIR/GEN/08/007. AlI eligible transactions are permitted to access foreign exchange at this window.”
The central bank also pointed out that the operational rate for all government-related transactions “shall be the weighted average rate of the preceding day’s executed transactions at the l&E window, calculated to two decimal places.”
It also announced the proscription of trading limits on oversold FX positions with permission to hedge short positions with OTC futures.
Limits on overbought positions shall be zero, it stated, while announcing the “re-introduction of order-based two-way quotes, with bid-ask spread of A1. All transactions shall be cleared by a Central Counter Party (CCP).”
CBN further announced, “Reintroduction of Order Book to ensure transparency of orders and seamless execution of trades. The operational hours of trades shall be from 9am to 4pm, Nigeria time.
“Cessation of RT200 Rebate Scheme and the Naira4Dollar Remittance Scheme, with effect from 30 June 2023.
“Further guidance on these matters shall be communicated in due course. All market participants and the general public are kindly enjoined to abide by these rules.”
James Emejo
Follow us on:
Gbadebo Rhodes-Vivour has condemned the commercialisation of GMO seeds, warning of threats to Nigeria’s food…
Gbadebo Rhodes-Vivour has condemned the commercialisation of GMO seeds, warning of threats to Nigeria’s food…
Oleksandr Usyk has secured victory over Tyson Fury in Riyadh, successfully defending his heavyweight championship…
Albania plans a one-year TikTok ban from January after a schoolboy’s death sparks concerns over…
A suspect accused of killing five people by driving into a crowded Christmas market in…
A US Navy F/A-18 Hornet was mistakenly shot down over the Red Sea by the…
View Comments
Making money is an action. Keeping money is behavior, but “growing money is wisdom”. I found this not too long ago after getting a reasonable return on my investment in 29 days.
Check: thenewglobalreserve. com