The Central Bank of Nigeria (CBN) has recently implemented a series of policy changes in an effort to improve transparency, liquidity, and price discovery in the foreign exchange (FX) market. These changes aim to enhance the supply of foreign currency, discourage speculation, instill customer confidence, and ensure overall stability.
Dr. Isa AbdulMumin, the Director of Corporate Communications at the CBN, stated that these policy changes were prompted by discussions held during an extraordinary Bankers’ Committee meeting on June 16. The CBN has provided further guidance to Deposit Money Banks (DMBs) to facilitate the implementation of these new measures.
Under the new guidelines, all visible and invisible transactions such as medical expenses, school fees, business travel allowances, and other remittances are now eligible for the Investors’ and Exporters’ (I & E) window. DMBs are required to process these transactions promptly, using the applicable exchange rate at the I & E window.
In addition, individuals with ordinary domiciliary accounts now have unrestricted access to their funds. They are permitted to utilize cash deposits up to $10,000 per day or its equivalent through telegraphic transfer. This flexibility enables individuals to manage their foreign currency accounts more effectively.
AbdulMumin further highlighted that DMBs must provide returns to the CBN, specifying the purpose of each transaction. This measure is aimed at promoting accountability and ensuring that funds are utilized for legitimate purposes.
Furthermore, the CBN emphasized that cash deposits into domiciliary accounts will not be restricted, subject to proper Know Your Customer (KYC) procedures conducted by the DMBs. This move aims to streamline banking processes and enhance customer experience.
The CBN is committed to prioritizing the settlement of committed FX forward transactions, demonstrating its commitment to market confidence. The Bank also aims to normalize its Cash Reserve Ratio (CRR) maintenance processes, ensuring equitable implementation across the banking industry.
Dr. AbdulMumin reassured stakeholders that the CBN will continue to engage with them and provide further guidance as it continues to implement ongoing reforms in the FX market.
Last week, the CBN made headlines by removing the foreign exchange cap, allowing banks to trade the Naira against the US dollar freely. This move is expected to enhance liquidity in the foreign exchange market and foster economic growth.
