The CBN (Central Bank of Nigeria) has assured that its ongoing foreign exchange reform is directed at promoting a market-based price discovery system.
This is contained in a circular by the bank duly signed by Duke Omolara Omotunde, director, financial markets department.
It also stated that it has discontinued any cap on the spread of interbank foreign exchange transactions and restrictions on the sale of interbank proceeds.
It stated: “A key objective of the ongoing foreign exchange market reform by the Cenral Bank of Nigeria is to promote a market-based price discovery system. “Consequently, the bank hereby discontinues any cap on the spread on interbank foreign exchange transactions and restrictions on the sale of interbank proceeds.
“Authorised dealers are to continue to conduct their foreign exchange transactions on a ‘willing buyer and willing seller’ basis. In addition, they are to strictly adhere to high ethical standards in their dealings in the foreign exchange markets.
“This includes, but not limited to, adopting appropriate price disclosure and transparency for transactions.” The bank also added that all executed transactions are to be recorded immediately on the relevant treasury system and reported to market authorities as stipulated.
This comes after the CBN recently imposed limits on how much banks can hold in foreign currencies. In a circular released on Wednesday, January 31, 2024, the CBN expressed concerns about the growth of forex exposures on their balance sheets as the naira continued to depreciate against the US dollar.
This happened after the market regulator, FMDQ Exchange, changed its closing rate calculation methodology for the naira.
