The Central Bank of Nigeria (CBN) has released rules guiding its new foreign exchange system. The rules are to guide the operations of Nigeria’s Inter-bank Foreign Exchange market, where people will be going to in the near future to buy dollar.
The CBN said it would participate in the Market through periodic interventions to either buy or sell FX as the need arises.
Here are some of the rules and guidelines:
- Companies, individuals and authorized dealers (banks and financial institutions mostly) and buyers will participate (buy and sell dollar) in the inter-bank FX market
- Authorised Dealers shall buy and sell FX among themselves on a two-way quote basis via the FMDQ Thomson Reuters FX Trading Systems or any other system approved by the CBN. They can also offer one-way quotes to other participants of the market.
- The offer rates in the inter-bank market shall be determined the Financial Market Dealers Association (FMDA). FMDA will also determine the maximum spread between bids.
- Proceeds from CBN’s Foreign Investment Inflows and International Money Transfers shall be purchased by Authorised Dealers at the inter-bank rate.
- Returns on the purchases and sales of FX shall be rendered daily to the CBN by Authorised Dealers.
- Inter-bank funds shall NOT be sold to Bureaux-deChange operators.
- all Authorised Dealers and end-users are required to trade only on FMDQ-advised FX Trading System(s). These trades shall be reported to the CBN as well.
- The 41 items classified as “Not Valid for Foreign Exchange” remain inadmissible in the Nigerian FX market
- The applicable exchange rate for the purpose of import duty payments shall be the daily inter-bank FX closing rate as published on the CBN website.