CBN confirms operational changes to foreign exchange market
The Central Bank of Nigeria, CBN, has confirmed the operational changes to the foreign exchange market.
In a statement on Wednesday by Angela Sere-Ejembi, Director, Financial Markets of CBN, the apex affirmed the abolishment of segmentation and all segments are now collapsed into the Investors and Exporter’, I &E window.
News reports that CBN had directed commercial banks to remove the cap on the naira at the investors’ and exporters’ window.
Giving perspective to the operational charges of the foreign exchange market, the country’s apex bank stated that applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks.
It announced the cessation of RT200 Rebate Scheme and the Naira4Dollar Remittance Scheme, with effect from June 30, 2023.
“The Central Bank of Nigeria (CBN) wishes to inform all authorized dealers and the general public of the following immediate changes to operations in the Nigerian Foreign Exchange (FX) Market: Abolishment of segmentation. All segments are now collapsed into the Investors and Exporters (1&E) window.
“Applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks.
“Re-introduction of the “Willing Buyer, Willing Seller” model at the 1&E Window.
“Operations in this window shall be guided by the extant circular on the establishment of the window, dated April 21, 2017, and referenced FMD/DIR/CIR/GEN/O8/007. All eligible transactions are permitted to access foreign exchange at this window.
“The operational rate for all government-related transactions shall be the weighted average rate of the preceding day’s executed transactions at the I&E window, calculated to two (2) decimal places.
“Proscription of trading limits on oversold FX positions with permission to hedge short positions with OTC futures. Limits on overbought positions shall be zero.
“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).
“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.
“All market participants and the general public are kindly enjoined to abide by these rules”, the statement reads.
The drastic change is coming amid the suspension of Godwin Emefiele as CBN governor last Friday by President Bola Ahmed Tinubu.
Recall that Tinubu, during his inaugural speech as president, had pledged to unify the country’s foreign exchange market and boost investors’ confidence.
