February 20, 2017

Central Bank of Nigeria: New Policy Actions in the Foreign Exchange Market

Dolapo Omidire

In a press release published earlier today, the Central Bank of Nigeria (CBN) has stated that it will be providing direct additional funding to banks to meet the needs of Nigerians for Personal and Business Travel, Medical needs, and School fees, effective immediately.

The CBN expects such retail transactions to be settled at a rate not exceeding 20 percent above the interbank market rate.

The texts below forms a brief summary.

Travel Allowances – All banks would receive amounts commensurate with their demand per week, which would be sold to customers who meet usual basic documentary requirements.

Forward Sales Tenor – The CBN has decided to significantly reduce the tenor of its forward sales from the current maximum cycle of 180 days, to no more than 60 days from the date of transaction.

FX Sales at Major Airports – In order to further ease the burden of travellers and ensure that transactions are settled at much more competitive exchange rates, the CBN hereby directs all banks to open FX retail outlets at major airports as soon as logistics permit.

Increase Efficiency of FX Market – 

  • CBN will begin implementing program to clear all the unfilled orders in the interbank FX market;
  • CBN will no longer impose allocation/utilization rules on commercial banks;
  • CBN will implement an effective intervention programme to support the inter-bank market to ensure adequate liquidity necessary to deliver an efficient FX market;
  • CBN will advise FMDQ to activate its FX Order-Book systems as soon as possible and also accelerate the on-boarding of FX clients on the FX Relationship Systems to ensure total transparency of the FX market.

Read the press release.

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