The Central Bank of Nigeria (CBN) has recently introduced additional policy adjustments, according to Dr. Isa AbdulMumin, the Director of Corporate Communications. These changes aim to enhance transparency, liquidity, and price discovery in the foreign exchange (FX) market. The primary objectives of the policy changes are to bolster FX supply, discourage speculative activities, instill customer confidence, and maintain overall stability in the FX market.
Following discussions at an extraordinary Bankers’ Committee meeting held on June 16, the CBN has provided further instructions to Deposit Money Banks (DMBs). The guidelines are as follows:
- All types of visible and invisible transactions, including medical expenses, school fees, BTA/PTA (Business Travel Allowance/Personal Travel Allowance), airline and other remittances, are eligible for the Investors’ and Exporters’ (I & E) window.
- DMBs are required to promptly process all eligible invisible transactions on behalf of their customers, utilizing the applicable exchange rate at the I & E window.
- Ordinary domiciliary account holders are granted unrestricted access to funds in their accounts.
- Domiciliary account holders can utilize cash deposits not exceeding $10,000 per day or an equivalent amount through telegraphic transfer.
Dr. AbdulMumin emphasized that DMBs must furnish the CBN with reports, including the purpose of such transactions.
He also clarified that cash deposits into domiciliary accounts will not be restricted, provided that DMBs adhere to proper Know Your Customer (KYC) protocols.
To boost market confidence, the CBN will prioritize the timely settlement of any committed FX forward transactions as they mature. The Bank will also normalize its Cash Reserve Ratio (CRR) maintenance processes, ensuring fairness in its implementation across the banking industry.
Dr. AbdulMumin assured stakeholders that the CBN will continue to engage with them and issue further guidance as the ongoing reforms are implemented.
Last week, on Wednesday, the CBN announced the removal of the foreign exchange cap, enabling banks to freely trade the Naira against the US dollar.