In response to the press statement released by the Central Bank of Nigeria (CBN) on June 14, 2023, outlining new guidelines in the foreign exchange market, an extraordinary Bankers’ Committee meeting was convened on Friday, June 16, 2023, to discuss the implementation and implications of these changes for the banking public.
The objective of these policy amendments is to enhance transparency, liquidity, and price discovery in the FX market, with the aim of improving FX supply, discouraging speculation, boosting customer confidence, and ensuring overall stability.
Dr. Isa Abdulmumin, the Director of Corporate Communications, stated that the CBN, based on the deliberations during the meeting, issued further instructions to Deposit Money Banks (DMBs). The guidance provided is as follows:
1. All visible and invisible transactions, including medicals, school fees, BTA/PTA, airline and other remittances, are now eligible for the Investors’ and Exporters’ (I & E) window.
2. DMBs are required to promptly process all eligible invisible transactions on behalf of their customers, utilizing the applicable rate at the I & E window.
3. Ordinary domiciliary account holders will have unrestricted access to funds in their accounts. These account holders can make use of cash deposits up to USD$10,000 per day or its equivalent through telegraphic transfer. DMBs must provide reports to the CBN, specifying the “purpose” of such transactions.
4. Cash deposits into domiciliary accounts will not be restricted, provided that DMBs comply with proper Know Your Customer (KYC) procedures, exercise due diligence, and adhere to the existing Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) laws, along with other relevant regulations.
5. The CBN will prioritize the orderly settlement of any committed FX forward transactions as they approach maturity, further bolstering market confidence.
6. The Bank will establish a fair and equitable approach to the maintenance of Cash Reserve Ratio (CRR) across the banking industry.
The CBN is committed to engaging stakeholders and issuing additional guidance as it implements the ongoing reforms in the foreign exchange market.
