CBN Boosts Forex Market With Fresh $190m Injection

• New Circular Allows Dealer-Dealer Fx Sales Without CBN Nod

As promised by its spokesman, the Central Bank of Nigeria (CBN), on Monday continued its relentless push to achieve rates convergence in the interbank and Bureau de Change segments of the nation’s foreign exchange market, with the injection of $190m.
While $100m went into wholesale interventions, the sum of $50m was allocated to the Small and Medium Enterprises (SMEs) forex window; just as customers requiring forex for invisibles such as Business/Personal Travel Allowances, tuition and medical fees, among others, got the remaining $40m.
Confirming the figures, Acting Director, Corporate Communications at the CBN, Isaac Okorafor, said the apex bank was pleased at the tremendous gain recorded by the Naira against the U.S$ in recent times.
According to him, the forex rates at both the inter-bank and BDC segments, have almost converged, prompting even greater optimism that the value of the Naira will continue to spike.
Okorafor observed that by ensuring transparency in the market as well as fairness to end-users, the CBN had further exposed speculators and checkmated them. He therefore urged all dealers, particularly licensed BDCs, to continue to play by the rule, adding that the CBN would not hesitate to wield the big stick against any erring bank or dealer.
The naira continued to maintain its strong stand against major currencies around the globe, exchanging for $364/$1 in the BDC segment of the market on Monday, June 5, 2017.
Meanwhile, the CBN, also on Monday, issued a circular aimed at further developing the foreign exchange market and improving its structure as it allows authorized dealers to sell their excess foreign currency to other authorized dealers without seeking prior approval from the CBN.
Such purchases shall however “only be sold by the buying authorized dealer to its customers for permitted/eligible transactions as outlined in the above referenced circular (FMD/DIR/CIR/08/007 OF April 21, 2017 on the establishment of the Investors & Exporters FX Window).”
While all documentation requirements for permitted transactions shall continue to apply, the circular also directed authorized dealers not to exceed their respective foreign currency trading position limit (FCTPL) without prior CBN approval.
The circular, signed by Dr. Alvan Ikoku, Director, Financial Markets Department, and dated June 5, 2017, added that “authorized dealers must report to the CBN, details (source and applications indicating the amount, counterparty, deal rate, etc) of all inter-bank purchases/sales by 4pm daily through the portal provided (”
Compliance of this, the circular added, “is mandatory.”