CBN Issues New Forex Policies
The Central Bank of Nigeria has released a new foreign exchange policy, allowing banks to sell foreign exchange to retail end users at airports without putting into consideration the 60:40 rule which prioritize the manufacturing and raw materials purchase.
Also the apex bank’s new forex policy has cut down 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. CBN in a release signed by its acting Director, Corporate Communications said it will commence the allocation of forex to banks for personal and business travel allowance.
It stated that having cleared the backlog of dollar demands of matured letters of credit, it will give banks commensurate with their demand per week, which would be sold to customers who meet usual basic documentary requirements.
Over the weekend, the CBN had directed banks to sell forex to customers to pay for school fees, travel expenses and medical bills at N375 to the dollar saying it will give $1 milion per week for the sales done by the banks.
“CBN would 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 would ensure that this process is as smooth as possible and that as many customers as possible get the foreign exchange they genuinely demand. This would also apply to customers seeking to make payments, or purchase foreign exchange, for medical bills and paid directly to hospitals” the release read.
The new forex policy also, directs all banks to open forex retail outlets at major airports “as soon as logistics permit, in order to further ease the burden of travellers and ensure that transactions are settled at much more competitive exchange rates.”
It noted further that to maintain confidence in the forex market, it will immediately begin implementing its articulated program to clear all the unfilled orders in the inter bank 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/utilization rules on commercial banks” and “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 says it will also advise FMDQ 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 forex market.
“Given the CBN’s objective to continuously and vigorously pursue a transparent, liquid, and efficient forex 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.”
