The Central Bank of Nigeria on Monday modified its foreign exchange policy with the reduction of the tenor of its forward sales from the current maximum cycle of 180 days to 60 days from the date of transaction.
For business and personal travel allowances, the CBN said it would ease the difficulties encountered by Nigerians in obtaining forex for these types of transactions.
To achieve this, it said in a statement issued by its Acting Director of Communications, Mr. Isaac Okoroafor, that it would provide direct additional funding to banks to meet the needs of Nigerians for personal and business travels, medical needs and school fees, effective immediately.
The CBN said it expected such retail transactions to be settled at a rate not exceeding 20 per cent above the interbank market rate.
It said, “Having cleared the historic backlog of matured letters of credit at the inception of the current flexible exchange rate system, the CBN will immediately begin to provide foreign exchange to all commercial banks to meet the needs of both personal travel allowances and business travel allowances for onward sale to customers.
“All banks will receive amounts commensurate with their demand per week, which will be sold to customers who meet usual basic documentary requirements.
“Similarly, the CBN will meet the needs of parents, guardians and sponsors who are seeking to make payments of school and educational fees for their children and wards. Such payments must be made by commercial banks directly to the institution specified by the customer.”
The CBN added that it would ensure that the process was smooth, noting that customers in need of forex would get the foreign exchange they genuinely demanded.
It said the decision was part of efforts to further increase the availability of foreign exchange to all end-users.
In a bid to ease the burden of travellers and ensure that transactions are settled at much more competitive exchange rates, the CBN directed all banks to open forex retail outlets at major airports across the country as soon as logistics permit.
The statement read in part, “In order to further increase the availability of foreign exchange to all end-users, 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.
“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.”
In a bid to increase the efficiency of the forex market and maintain its confidence, the CBN said it would immediately begin the implementation of an articulated programme to clear all the unfilled orders in the interbank forex market.
“Given our plan to meet all unfilled orders, and while provision of forex to the manufacturing sector would remain the CBN’s strong priority, we will no longer impose allocation/utilisation rules on commercial banks,” it added.
The statement noted that the CBN would implement an effective intervention programme to support the inter-bank market to ensure adequate liquidity necessary to deliver an efficient forex market.
The apex bank also advised the Financial Market Dealers Exchange to activate its forex order-book systems as soon as possible and also accelerate the on-boarding of forex clients on the forex relationship systems to ensure total transparency of the market.
The statement added, “Given the CBN’s objective to continuously and vigorously pursue a transparent, liquid and efficient foreign exchange market, the bank reiterates it would neither tolerate unscrupulous actions nor hesitate to bring serious sanctions on offenders, be they banks or their staff.
“The bank, therefore, encourages market participants to assist in ensuring that these new measures engender the preservation of our external reserves, stability of our financial system, and growth of our economy to the benefit of all Nigerians.”