New forex rule: CBN frees market

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The Central Bank of Nigeria Governor, Mr. Godwin Emefiele has removed the pegs on the Naira to allow foreign market forces to determine the true value of the currency against other currencies across the world.
Emefiele explained that the new policy would halt the free fall of the Naira and that the apex bank would operate a single trading window, which will take off on June 20, 2016.
The CBN governor also said that the CBN would only step in from time to time to regulate the market.
He added that the bank would appoint less than a dozen primary dealers, who would now be in charge of foreign exchange trading, driving flexibility in the system.
“The market shall operate as a single market structure through the inter-bank/autonomous window; the Exchange Rate would be purely market-driven, using the Thomson-Reuters Order Matching System as well as the Conversational Dealing Book.
“The CBN would participate in the Market through periodic interventions to either buy or sell foreign exchange as the need arises; to improve the dynamics of the market, we will introduce Foreign Exchange Primary Dealers (FXPD), who would be registered by the CBN to deal directly with the Bank for large trade sizes on a two-way quotes basis. These Primary Dealers shall operate with other dealers in the Inter-bank market, amongst other obligations that will be stipulated in the Foreign Exchange Primary Dealers (FXPD) Guidelines,” he said.
The CBN governor insisted that the 41 items classified as ‘not valid for foreign exchange’, as detailed in a previous CBN Circular, shall remain inadmissible in the Nigerian foreign exchange market.