CBN Unveils FX Window For Investors, Exporters

Further to its decision to ease access to and deepen foreign exchange market and accommodate all legitimate FX transactions, the Central Bank of Nigeria (CBN), on Friday announced the establishment of a special window for investors, exporters and end-users, while ensuring timely execution and settlement of eligible transactions.
While investors and exporters cannot access forex through the window for international airlines ticket sales’ remittances, the circular signed by Dr. Alvan Ikokwu, Director, Financial Markets Department, funds can be sourced through the window for loan repayments, loan interest payments, dividend/income remittances, capital repatriation, management services fees, consultancy fees, software subscription fees, technology transfer agreements, personal home remittances and any such other eligible invisible transactions including ‘miscellaneous payments’ as contained in the Memorandum 15 of its foreign exchange manual.
International airlines ticket sales remittances, the circular added, “shall only be eligible to access the CBN FX window (i.e., Secondary Market Intervention Sales (SMIS)- Retail and Wholesale; Spot and Forwards.”
The circular noted that while the CBN shall also be a participant in the window to promote liquidity and professional market conduct, “supply of forex shall be through portfolio investors, exporters, authorized dealers and other parties with foreign currency to exchange for Naira.”
Exchange rates of the transactions in the window are to be agreed between the authorized dealers and their counterparties; while the CBN reserves the right to intervene as a buyer or seller.
Also as part of the operational requirements, “authorized dealers may hold positions subject to their respective Foreign Currency Trading Position Limits (FCTPL)” which the authorized dealers shall not exceed without the approval of the CBN, which shall strictly monitor compliance.
“Market participants in the FX market shall have opportunities to hedge thei3r foreign exchange exposures. Authorised dealers shall provide the market with required FX hedges including forwards, swaps, futures or options.
“The CBN shall continue to bolster liquidity in the derivatives market with the Naira-settled OTC FX Futures which shall, going forward, settle on NAFEX.