CBN review foreign exchange policy, provides additional funding to banks

 

THE Central Bank of Nigeria (CBN) has reviewed its forex policy to ease the difficulties encountered by Nigerians in obtaining funds for foreign exchange transactions.
The apex bank in the statement signed by Acting Director, Corporate Communications of the bank, Isaac Okorafor, CBN has provided direct additional funding to banks to meet the needs of Nigerians for personal and business travel, medical needs, and school fees with immediate effective.
According to Okorafor, the CBN expects such retail transactions to be settled at a rate not exceeding 20 percent above the interbank market rate.
The new CBN policy stated that “having cleared the historic backlog of matured letters of credit at the inception of the current flexible exchange rate system, the CBN would immediately begin to provide foreign exchange to all commercial banks to meet the needs of both personal travel allowances (PTA) and business travel allowances (BTA) for onward sale to customers. All banks would receive amounts commensurate with their demand per week, which would be sold to customers who meet usual basic documentary requirements.”
The reviewed policy stated that, “the CBN would meet the needs of parents, guardians and sponsors who are seeking to make payments of school and educational fees for their children and wards. Such payments must be made by commercial banks directly to the institution specified by the customer. The CBN would ensure that this process is as smooth as possible and that as many customers as possible get the foreign exchange they genuinely demand. This would also apply to customers seeking to make payments, or purchase foreign exchange, for medical bills and paid directly to hospitals. The supply of FX to retail end-users (PTA, BTA, School fees, medical bills, etc) would be sustained by the CBN.”
In order to further increase the availability of foreign exchange to all end-users, the CBN has decided to significantly reduce the tenor of its forward sales from the current maximum cycle of 180 days, to no more than 60 days from the date of transaction, the stamens said.
In order to further ease the burden of travellers and ensure that transactions are settled at much more competitive exchange rates, the CBN directed all banks to open FX retail outlets at major airports as soon as logistics permit.
Other immediate steps took by the apex bank to further maintain confidence in the FX market includes, implementation of its articulated program to clear all the unfilled orders in the interbank FX market; given its plan to meet all unfilled orders; implement an effective intervention programme to support the inter-bank market to ensure adequate liquidity necessary to deliver an efficient FX market and advise FMDQ to activate its FX Order-Book systems as soon as possible and also accelerate the on-boarding of FX clients on the FX Relationship Systems to ensure total transparency of the FX market.
“Given the CBN’s objective to continuously and vigorously pursue a transparent, liquid, and efficient FX Market, the Bank reiterates it would neither tolerate unscrupulous actions nor hesitate to bring serious sanctions on offenders, be they banks or their staff. The Bank therefore encourages market participants to assist in ensuring that these new measures engender the preservation of our external reserves, stability of our financial system, and growth of our economy to the benefit of all Nigerians”, the statement said.