Update on the “More Flexible” FX Policy Regime.

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The Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, just spelt out more details of the “more flexible” FX policy regime. The CBN promised that the specifics on the full construct of the new FX regime will be released soonest.
Meanwhile, the highlights of the briefing are as follows:

  • Market will operate as single market through the interbank.
  • FX Rate will be purely market-driven.
  • CBN will participate through periodic interventions.
  • FX primary dealers will be registered to deal directly with the CBN for large deal sizes. FX primary dealers will deal with other authorized dealers.
  • There will be no more spread restrictions (positive for bank’s NIR).
  • The 41 items classified for not valid for FX are still not admissible in FX interbank market.
  • CBN may offer long-tenored FX forwards.
  • Selling of FX forwards must be trade backed with no pre-determined spreads.
  • OTC FX futures will be introduced. The OTC FX futures are bespoke and volumes could be non-standard.
  • Non-oil exporters are now allowed unfettered access to export proceeds via the interbank market.
We promise you more updates and breakdown of this policy in our subsequent posts.