CBN apply new forex rule

– Only authorised dealers will be allowed to
trade on interbank markets henceforth
– CBN says it will release guidelines to
primary dealers on Friday
The Central Bank of Nigeria (CBN) has officially announced a new
foreign exchange policy and has listed some implications of new
development.
The implication of this is that the Nigerian currency has been floated
and that there will be a single market for acquisition of the foreign
currency.
Godwin Emefiele, the CBN governor, made this announcement during
a press conference in Abuja on Wednesday afternoon.
Analysts including those at Renaissance Capital Ltd had said they
expect the CBN to allow the naira to weaken around a trading band
in the interbank market, while allocating dollars at a fixed rate to
industries the government deems strategic.
According to Channels TV, the market would operate as a single
market structure via the interbank market and authorised dealers
an implication that it would be purely an exchange rate market
managed via Thompson Reuters platform.
It stated also that part of the key notes is that the CBN would
participate via periodic intervention and would introduce primary
dealers that deal with the CBN on a two way quote basis while
the primary dealers are also expected to deal with other players in
the interbank market.
Also, there shall be no pre-determined spreads on forex
transactions and all forex purchases shall be transferable while 41
items shall remain inadmissible in the forex market for forex
transactions.
Therefore, the CBN will also offer long term forex futures and sales
of forex forwards for end users must be trade-backed as well
as introduce non-deliverable OTC forex settled trades to help
moderate volatility .
Only authorised dealers are allowed to purchase proceeds of forex
daily at the interbank rates guidelines of which the CBN says it will
introduce to primary dealers on Friday.
Consequently, interbank trading would begin on Monday, June 20
and tenors and rates for OTC settled forex feature would be
announced same day.