Further to its resolve to ease the hiccups in the nation’s foreign exchange market announced Monday, February 20, 2017, the Central Bank of Nigeria (CBN) on Tuesday announced a $500m special wholesale intervention forward not exceeding 60 days under conditions including not applying all provisions of clause 2.4.3 (SMIS-Wholesale) of the revised guidelines for operation of the Nigerian Inter-bank Foreign Exchange Market of June 2016.
Authorised forex dealers are expected to send their request for amounts not exceeding 7.5% of the amount on offer, while not allocating funds for customers’ letters of credit that have already benefited from past SMIS yet to mature.
According to the statement by Dr. Alvan E. Ikoku, Director, Financial Markets Department of the CBN, while allowed spread between bid and offer shall be 50 kobo, no bank is allowed to exceed its Net Trading Position limit, just as “successful banks account shall be debited immediately after the release of the intervention result at their quoted rates.”
Successful banks shall also send their returns to the Director, Financial Markets Department, 24 hours after release of the intervention result, even as such forward sale by banks to their customers shall be for mature or past due obligations.
The CBN also requires banks to open equivalent amount of fresh LCs, whether confirmed or not, for any of their customers and send evidence of such fresh LCs within a week of release of the auction results.
The statement warned that CBN examiners would be sent to the banks immediately after the intervention and that “any banks fails to comply with the rules of this and other extant forex guidelines shall be sanctioned, which will affect the executive and other officers of the bank.
While inviting authorized dealers to submit bid requests for the special intervention through email and hard copy at the CBN’s Abuja headquarters, the statement added that all allotment must be trade backed, no multiple bid is allowed, even as the apex banks reserves the right to disqualify any bid adjudged “unreasonable.”