Forex Crisis: CBN Introduces New Policy

Nigeria’s Central Bank on Monday rolled out new forex measures to curb the galloping exchange rate of the naira as it vowed to fund the items causing demand pressure at the parallel market.

According to the apex bank’s acting Director of Communications, Isaac Okoroafor, “the CBN is providing direct additional funding to banks to meet the needs of Nigerians for Personal and Business Travel, Medical needs, and School fees, effective immediately.

“For medical and school fees, 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.

“The CBN expects such retail transactions to be settled at a rate not exceeding 20 per cent above the interbank market rate,” he said.

Okorafor said that this would also ensure that transactions were settled at much more competitive exchange rates.

To ease the burden of travellers, the Central Bank of Nigeria (CBN) has directed all banks to open Foreign Exchange outlets to sell dollars and other hard currencies at major airports.

The banks are to do so as soon as logistics permit, Okoroafor said.

Okorafor said that the apex bank had also reduced the tenure of its Forward Sales from the current maximum cycle of 180 days, to not more than 60 days from the date of transaction.

“In order to maintain confidence in the FX market, the CBN will immediately begin implementing its articulated programme to clear all the unfilled orders in the interbank FX market.

“Given our plan to meet all unfilled orders, and provision of FX to the manufacturing sector would remain the CBN’s strong priority, we will no longer impose allocation rules on commercial banks.

“We will implement an effective intervention programme to support the inter-bank market to ensure adequate liquidity necessary to deliver an efficient FX market,” he said.

Okorafor said that the FMDQ trading had also been advised to activate its Foreign Exchange Order-Book systems as soon as possible and also accelerate the on-boarding of FX clients on the FX Relationship Systems to ensure total transparency of the FX market.

The apex bank urged market participants to assist in ensuring that these new measures were followed to preserve the external reserves, stability of the financial system and economic growth for the benefit of all Nigerians.


Download –CBN’s New Foreign Exchange Policy
Download –CBN's Guideline on the Operationalization of the New Policy on PTA and School Fees