Due to the constant fluctuations being experienced recently with the current exchange rate in the country, customers will likely begin to get better deals moving forward, as the Central Bank of Nigeria, (CBN) has given the directive that allows banks to fix foreign exchange rates as they consider fit.
Speaking, through a circular, FMD/DIR/PUB/CIR/001/012 and released by the Director, Financial Markets Department of the CBN, Dr Omolara Omotunde and addressed to ‘All Authorized Dealers’, she stated that the CBN had taken the decision to discontinue any cap on the spread on interbank foreign exchange transactions and restrictions on the sale of interbank proceeds.
The secular was made public on the same day that the Central Bank Governor, Olayemi Cardoso informed the Senate that the apex bank had suspended granting of Ways and Means to the federal government until they settle the outstanding balance.
After removing the caps on the spread of interbank foreign exchange transactions, banks are now free to establish their own prices depending on supply and demand. By so doing, it would be easy for the market to determine what it considers a fair rate for foreign currencies, especially the dollar.
According to analysts, this new change where CBN allows banks to fix forex rates, will afford the banks more flexibility to sell Foreign exchange to anyone they choose. It’s real it will also results in a faster more convenient access foreign currency used for businesses and individuals.
The apex bank authorized that dealers should continue to conduct their foreign exchange transactions on a ‘Willing Buyer and Willing and Willing Seller’ basis and also, to ‘strictly adhere to high ethical standards and guidelines in the foreign exchange markets. This includes, but is not limited to adopting appropriate price disclosures and transparency for transactions.’
The CBN is however demanding transparency from the banks, asking them to clearly show their prices and stop deceiving customers, even as they promised to continue to monitor the market and make changes where required.
The CBN expressed that this new approach will promote efficiency and equity in the foreign exchange market, fight artificial distortions and ensure that foreign exchange is accessed by everyone at a reasonable price.
The apex bank also has the intention of encouraging greater foreign investment by simplifying the process of buying and selling foreign exchange and attracting more foreign investors with the intention to stimulate the nation’s economy and discourage the use of black market.
International Money Transfer Operators (IMTOs) like WorldRemit and Western Union have started being compliant with the January 31,2024 directive from CBN which stopped them from making dollar transfers to Nigeria. They are now to make payments in Naira in respect of inbound transfers of remittance services from outside the country.
The circular also hinted on Foreign Exchange Management, adding that it is a part of the reason why there is a continuous decline in the value of Naira because of the increased demand pressures being faced by the foreign exchange market.10:55
