CBN injects $371m into FOREX market, 24 hours after new policy.

About 24 hours after The Central Bank of Nigeria (CBN) announced fresh policy actions in the foreign exchange market, the bank has pumped $370.9 million into the forex market.

On Tuesday, the apex bank carried out wholesale interventions in the interbank forex market by trading a total of $370,810,810.79 to 23 banks “to meet the visible and invisible requests of customers”.

A source at the CBN said the qualified bids ranged from N315 to N360 per dollar, adding that seven banks received full allotments of their respective bids valued at $37,500,000 each.

“Other banks received allotments ranging from $46, 512.50 to $15,578,081.51,” the source added.

Isaac Okorafor, acting director, CBN corporate communications department, said the bank’s intermediation in the forex market was the first wholesale intervention aimed at easing the pressure of access to forex by Nigerians who intend to meet obligations that fall under visible and invisible needs categories.

He explained that the CBN offered $500,000,000.00 for sale to the banks, but not all of them provided enough naira backing to pay fully for their respective bid amounts.

On Monday, the CBN unveiled new policy actions to make forex readily available for personal and business travels, medicals and school fees.

As part of its new policy action, the CBN also directed all banks in the country to open forex retail outlets at major airports as soon as logistics permit them to do such.

In line with the new policy, the CBN also made spot sales of $6 million to four banks, and sold $35 million for the payment of school fees, medical bills and personal and business travel allowances.

 

Source: The Cable

11 benefits Nigerians could enjoy from CBN’s new FOREX policy – By Bassey Udo

The Central Bank of Nigeria, CBN, on Monday unveiled a new foreign exchange, FOREX, policy. The policy is to increase availability of FOREX to ease the difficulties Nigerians encounter in funding foreign exchange transactions.

Here are 11 benefits the new policy is expected to bring to Nigerians if efficiently implemented.

1. FOREX to be provided directly to Nigerians through deposit money banks.;

2. CBN to fund personal and business travels;

3. FOREX for school fees by Nigerian students to be paid directly to specified institutions through banks;

4. Medical bills by Nigerians to be paid directly to the specified hospitals abroad through the banks;

5. All retail transactions to be settled at a rate not exceeding 20 per cent above the prevailing inter-bank market rate.

6. Banks to receive FOREX to be sold to customers commensurate with their demand per week;

7. Supply of FOREX to retail end-users to be sustained by the CBN;

8. CBN’s forward sales tenor significantly reduced from the current maximum cycle of 180 days, to no more than 60 days from the date of transaction;

9. Banks to open FOREX retail outlets at major airports to ease travelers’ burden and ensure settlement on transactions;

10. Give priority FOREX allocation to the manufacturing sector;

11. Allocation/utilisation rules on commercial banks removed.

 

Source: Premium Times

Governors slam Nigeria’s forex policy as Naira falls; demand urgent review.

Worried by the continued widening gap between the inter-bank foreign exchange and parallel market rates, the National Economic Council, NEC, on Thursday demanded the immediate review of the current foreign exchange policy by the Central Bank of Nigeria.

Nasarawa State Governor, Tanko Al Makura, who briefed journalists at the end of the meeting in Abuja said the Council, presided by acting President Yemi Osinbajo, expressed serious concern over the current situation of the exchange rate, especially the gap between inter-bank and the parallel market rates.

The council therefore called on the CBN Governor, Godwin Emefiele, to do something immediately.

The National Economic Council has as members governors of the 36 states, as well as CBN governor. It is headed by the vice president.

Prior to the introduction the flexible foreign exchange policy June last year, the exchange rate for Naira stood within a band of N197 and N199 to the dollar.

But, the removal of the exchange band, which was expected to increase supply of the dollar and help the nation’s weak economy, lessened government controls on the exchange rate.

While the government retained partial control at interbank and BDC rates, while the parallel market rate spiraled over the past months.

Since then the gap between the interbank (the official rate) and parallel market rates has been widening, raising concerns.

While the interbank rate stood at N280 to the dollar on the first day of the unveiling of the policy by the CBN, the parallel market rate was as high as N310 to the dollar.

Since then, the rate has been on the upswing, with interbank rate standing at about N305.50 to the dollar on Thursday, against the parallel rate of N510 to the dollar.

However, the CBN Governor at the meeting pleaded for patience and understanding, assuring that the situation was being closely managed.

During the Monetary Policy Committee meeting in January, Mr. Emefiele had said despite claims that there were almost seven different exchange rates in the country, the only rate recognised by CBN was the official inter-bank rate.

No query

Meanwhile, following reports that the bank was queried by the Attorney General of the Federation and Minister of Justice over issues relating to the sale of foreign exchange, its spokesperson, Isaac Okorafor, denied that neither the CBN governor nor the Director, Legal Services Department had received any communication to that effect.

Mr. Okorafor said as a responsible and responsive arm of government, the CBN would “always provide clarifications on any matter within its purview for the purpose of educating and enlightening all concerned.”

He said CBN had no direct dealings with any bank customer on foreign exchange transactions, pointing out that such transactions were always consummated strictly between the customers and their respective deposit money banks.

The figures of foreign exchange sold, he explained, had always been published in national dailies or on its arguing that transactions referred to in the publication were those between the banks and their customers.

Consequently, the CBN directed banks to ensure that henceforth returns on foreign exchange allocations in third currencies, such as Japanese Yen and South African Rand, Euros, Dollars should be reported in a new format approved by the CBN.

“The CBN has directed ALL Deposit Money Banks to render their returns in a uniform format converting all forex sales and purchases to NGN/USD. All third currency transactions are also to be converted to NGN/USD,” Mr. Okorafor said.