The Central Bank of Nigeria has released guidelines for the new flexible foreign exchange policy it announced in May.
Find key aspects of the guidelines below:
- The forex market is to operate as a single market structure through the inter-bank/autonomous window.
- Exchange rate will be purely market-driven.
- CBN will participate in the market through periodic interventions to either buy or sell forex.
- CBN will introduce forex Primary Dealers to deal on large trade sizes on a two-way quotes.
- Forex primary dealer have to meet the following criteria: Minimum Shareholders Fund unimpaired by losses of at least ‚¦200bn; minimum of N400bn in Total Foreign Currency and minimum Liquidity Ratio of 40 per cent.
- Primary dealers to operate with other dealers in the interbank market.
- No predetermined spread on forex spot transactions executed through the CBN intervention with Primary Dealers.
- Forty-one items classified as ‘Not valid for Foreign Exchange’ shall remain in admissible in the Nigeria forex market.
- CBN may offer long-tenored forex Forwards of six to 12 months or any tenor to Authorised Dealers.
- Sale of forex forwards by Authorised Dealers to end-users must be trade-backed, with no predetermined spreads.
- CBN to introduce non-deliverable over-the-counter naira-settled futures.
- Proceeds of foreign investment inflows and International money transfers to purchased by Authorised Dealers.
- Non-oil exporters now allowed unfettered access to their FX proceeds.