The Central Bank of Nigeria has mandated all authorized dealers in the foreign exchange market to discontinue any cap on the spread of interbank foreign exchange transactions and restrictions on the sale of interbank proceeds.
A circular issued by the bank on Thursday and signed by Dr. Omolara Omotunde, Director Financial Markets Department, urged authorized dealers to continue to conduct their foreign exchange transactions on a ‘’Willing Buyer and Willing Seller’’ basis.
In addition, dealers are to strictly adhere to high ethical standards in their dealings in the foreign exchange markets.
“This includes but is not limited to adopting appropriate price disclosures and transparency for transactions. Please note that all executed transactions are to be recorded immediately on the relevant treasury systems and reported to market authorities as stipulated,’’ the CBN said.
In June last year, CBN announced the unification of all segments of the forex market collapsing all windows into one.
The move was part of a series of immediate changes to operations in the Nigerian Foreign Exchange Market, in a bid to improve liquidity and stability.
According to a press release signed by the Director of Financial Markets, Angela Sere-Ejembi, and dated 14 June 2023, the changes include among others:
1. Abolishing the segmentation of the FX market into different windows. All transactions will now be done through the Investors and Exporters (I&E) window, where the exchange rate will be determined by market forces. Applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks.
2. Reintroducing the “Willing Buyer, Willing Seller” model at the I&E window, where all eligible transactions can access foreign exchange at their preferred rates.
3. Setting the operational rate for all government-related transactions at the weighted average rate of the previous day’s executed transactions at the I&E window, rounded to two decimal places.
