The Central Bank of Nigeria (CBN) has finally allowed market forces to determine the true value of the Nigerian local currency- Naira (N) – against other currencies across the world. This was disclosed by the Governor of the CBN, Godwin Emefiele, who spoke at a press conference in Abuja on Wednesday . . .
Emefiele said the central bank (banker of bankers) will operate a single trading window, which will take off on June 20, 2016, adding that the CBN will only step in from time to time to regulate the market.
Emefiele said the bank will appoint less than a dozen primary dealers who would now be in charge of foreign exchange trading, driving flexibility in the financial system.
The governor added that the 41 banned items remain banned, and cannot access forex from the new window.
Summary of Central Bank of Nigeria CBN New Forex Policy
Read summary of the Press Conference held by the Governor of the Central Bank on the Flexible Exchange Rate Policy held on June 15, 2016.
1. The Market will operate as single market through the interbank
2. The FX Rate will be purely market-driven
3. CBN will participate through periodic interventions
4. FX primary dealers will be registered to deal directly with the CBN for large deal sizes.
5. FX primary dealers will deal with other authorised dealers
6. There will be no more spread restrictions
7. The 41 items classified for not valid for FX are still not admissible in FX interbank market
8. CBN may offer long-tenured FX forwards
9. Selling of FX forwards must be trade backed with no pre-determined spreads
10. Over the Counter FX futures will be introduced. The OTC FX futures are bespoke and volumes could be non-standard
11. Non-oil exporters are now allowed unfettered access to export proceeds via the interbank market
12. Guidelines of the general FX market will be released immediately
13. Guidelines for FX primary dealers will be released immediately
14. FX primary dealers will be appointed and notified by June 17, 2016
15. Interbank FX trading under the new guidelines will begin on June 20, 2016
Additional details will be released as soon they are published by the Central Bank.