Dealers to trade dollars without permission on I&E window

The Central Bank of Nigeria in reinforcing its drive to ensure convergence of rates at the foreign exchange market further liberalized the interbank end of the marker, limiting the spread at the Investors and Exporters window to N1.

It also further pumped $190 million into the market.

CBN in a circular issued to all Authorised Dealers and signed by the Director Financial Markets, Dr. Alvan Ikoku, yesterday said they “may defease their excess foreign currency trading positions to other authorised dealers without seeking prior approval from the CBN”.

Stating that all interbank transactions shall be subject to a maximum spread of N1, the circular said “funds purchased by an authorised dealer from another authorised dealer in the interbank market shall not be held in position overnight by the buying authorised dealer or sold to another authorised dealer

“Such interbank market shall only be sold by the authorised dealer to its customers for permitted eligible transactions. All documentation requirements for permitted transactions shall apply”.

It however advised authorised dealers to encourage their corporate clients to “on-board the FMDQ Advised FX trading system immediately to avoid sanctions foster the speedy migration of activities of the Investors and Exporters window unto the foreign currency trading system and in turn ensure that the objective of deepening the market is achieved”.

The CBN Director, Corporate Communications, Isaac Okoroafor, explained that the new circular, among other provisions, allowed authorized dealers to sell their excess foreign currency trading positions to other authorized dealers without seeking prior approval from the CBN.

Commenting on the further injection of $190 million at the interbank market, Okoroafor said the apex bank was pleased at the performance of the naira, which had made tremendous gain against the dollar in recent times.

According to him, the forex rates at both the inter-bank and BDC segments, had almost converged, prompting even greater optimism that the value of the naira would continue to spike.

Yesterday, the CBN offered the sum of $100 million as wholesale interventions and allocated the sum of $50 million to the Small and Medium Enterprises (SMEs) forex window.

Customers requiring forex for Business/Personal Travel Allowances, tuition and medical fees, among others, got $40 million.

Okorafor observed that by ensuring transparency in the market as well as fairness to end-users, the CBN had further exposed speculators and checkmated them.

He therefore urged all dealers, particularly licensed BDCs, to continue to play by the rule, adding that the CBN would not hesitate to wield the big stick against any erring bank or dealer.

The naira continued to maintain its strong stand against major currencies around the globe, exchanging for $364 to the dollar in the BDC segment of the market on Monday and N270 at the parallel market.