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:
1. The forex market is to operate as a single market structure through the inter-bank/autonomous window.
2. Exchange rate will be purely market-driven.
3. CBN will participate in the market through periodic interventions to either buy or sell forex.
4. CBN will introduce forex Primary Dealers to deal on large trade sizes on a two-way quotes.
5. 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.
6. Primary dealers to operate with other dealers in the interbank market.
7. No predetermined spread on forex spot transactions executed through the CBN intervention with Primary Dealers.
8. Forty-one items classified as ‘Not valid for Foreign Exchange’ shall remain inadmissible in the Nigeria forex market.
9. CBN may offer long-tenored forex Forwards of six to 12 months or any tenor to Authorised Dealers.
10. Sale of forex forwards by Authorised Dealers to end-users must be trade-backed, with no predetermined spreads.
11. CBN to introduce non-deliverable over-the-counter naira-settled futures.
12. Proceeds of foreign investment inflows and International money transfers to purchased by Authorised Dealers.
13.Non-oil exporters now allowed unfettered access to their FX proceeds