- The Central Bank of Nigeria has said Forex dealers can now fix their foreign exchange rates
- The bank said the move is to ensure transparency and easy access to foreign exchange to help boost the naira
- CBN said banks are now to conduct their FX transactions on a ‘Willing Buyer and Willing Seller’ basis
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The Central Bank of Nigeria (CBN) has paved the way for banks to sell foreign exchange at rates they deem fit in plans to stabilise the naira.
CBN’s director of financial markets department, Omolara Omotunde, disclosed this in a circular addressed to all authorised dealers.
Omotunde said the bank has decided to discontinue any restrictions on the sale of interbank proceeds.
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The circular came after the CBN governor, Olayemi Cardoso, told lawmakers that the bank has halted the Ways and Means advances to the Nigerian government until the government settles the outstanding balance, Legit.ng reported.
Commercial banks can now establish their rates based on demand by removing the caps in the spread at the interbank foreign exchange transactions.
The move allows the market to decide what it considers a fair rate for foreign currencies, especially the US dollar.
Banks now have more flexibility to sell Forex to anyone they choose, and the change could result in more rapid and easier access to Forex for businesses and individuals.
The Nation reports that the apex bank said authorised dealers are to continue conducting their FX transactions on a ‘Willing Buyer and Willing Seller’ basis and adhere to high ethical standards in their FX markets.
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CBN warns banks against deceiving customers
The measure includes and is not limited to adopting appropriate price disclosures and transaction transparency.
However, the financial institutions regulator demands transparency from the banks, asking them to declare their prices and, not deceive customers and report all transactions to the CBN.
CBN also promised to continue monitoring the market and adjusting as needed.
It expects this new approach to enhance fairness and efficiency in the Forex market, end artificial distortions and ensure that everyone can access Forex at a reasonable price.
Banks to pay naira for forex remittances
Legit.ng reported that Nigerian banks have begun full implementation of the CBN's revised guidelines on international money transfer operations in the country.
The CBN released revised guidelines for the operations of International money transfer operators (IMTOs) and instructed banks to begin paying dollars and other foreign currency payouts from abroad in naira to boost forex supply and starve the black market traders.
The apex bank also noted that the exchange rate for the naira payment shall be at the prevailing rate in the Nigerian Foreign Exchange Market.
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