While trying to reduce the pressure on the Naira at the Foreign Exchange Market, The Central Bank of Nigeria (CBN) has unveiled new policy actions aimed at achieving this goal.
The Naira which has fallen weakly against the Dollar, is currently exchanging at N522 per Dollar.
The CBN, in the new policy said it is providing direct additional funding to banks to meet the needs of Nigerians for personal and business travel, medical needs, and tuition fees, effective immediately.
The CBN said it expects such retail transactions to be settled at a “rate not exceeding 20 percent above the interbank market rate,” which presently stands at N305.50k per Dollar.
The CBN explained that this step was taken in a continued effort to increase the availability of forex in order to ease the difficulties encountered by Nigerians in obtaining funds for transactions.
Mr Isaac Okorafor speaking for the CBN said, “All banks would receive amounts commensurate with their demand per week, which would be sold to customers who meet usual basic documentary requirements”.
The statement also revealed that the CBN would meet the needs of parents, guardians and sponsors who are seeking to make educational tuition payments for their children and wards. Such payments must be made by commercial banks directly to the institution specified by the customer. This would also apply to customers seeking to make payments, or purchase foreign exchange, for medical bills and paid directly to hospitals.
The CBN further said that in order to further increase the availability of foreign exchange to all end-users, it 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 and pointed out that as way of further easing the burden of travellers and ensure that transactions are settled at much more competitive exchange rates, it has directed all banks to open FX retail outlets at major airports as soon as logistics permit.
The CBN further said it will implement an effective intervention programme to support the inter-bank market to ensure adequate liquidity necessary to deliver an efficient FX market; 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 pursue a transparent, liquid, and efficient FX Market, the Apex Bank reiterates it would neither tolerate unscrupulous actions nor hesitate to bring serious sanctions on offenders, be they banks or their staff,”.
The CBN urged market participants to assist in ensuring that these new measures engender the preservation of Nigeria’s external reserves, stability of the country’s financial system, and growth of the nation’s economy to the benefit of all Nigerians.