In a recent move, the Central Bank of Nigeria (CBN) has taken a significant step by eliminating the spread on foreign exchange transactions. This pivotal decision was communicated through a statement from the CBN Financial Markets Department, undersigned by Duke Omolara Omotunde, and dated February 8, 2024. The statement, titled ‘Removal of the Spread on Foreign Exchange Transactions’, was disseminated to all authorized dealers.
According to the statement, the primary goal of CBN’s ongoing reforms in the foreign exchange market is to foster a market-based price discovery system. As a result, the CBN has officially terminated any cap on the spread of interbank foreign exchange transactions and lifted restrictions on the sale of interbank proceeds.
The directive emphasizes that authorized dealers must continue to execute their foreign exchange transactions based on a ‘Willing Buyer and Willing Seller’ framework. Additionally, they are urged to uphold stringent ethical standards in all foreign exchange dealings. This notably includes the adoption of appropriate price disclosures and transaction transparency.
Furthermore, the statement explicitly instructs that all executed transactions be promptly recorded in the relevant treasury systems and reported to market authorities in accordance with regulations.
This bold move by the CBN is poised to have broad implications and is anticipated to contribute significantly towards fostering a more transparent and market-driven foreign exchange environment in Nigeria.
