The Central Bank of Nigeria (CBN), has adopted a single window corridor for all foreign exchange transaction in the country beginning from August 1, 2016, reports ITRealms.
A circular to this effect to banks and endorsed by Director, Financial Market Department (FMD), Dr. Alvan Ikoku, said the CBN’s action will engender transparency and professionalism in the Nigerian foreign exchange market.
“The Central Bank of Nigeria hereby directs that all FX related trades by Authorised Dealers (Banks) and Corporate Institutions in the Nigerian FX market, with effect from Monday, August 1, 2016 must be executed through the FMDQ-advised FX trading Auction and Surveillance Systems,” part of the circular read.
ITRealms also gathered that this was in a bid to stabilize the naira, CBN had in June adopted a flexible foreign exchange policy.
Ikoku explained that in adopting the new policy, CBN Governor, Mr. Godwin Emefiele assured that the policy would guarantee improved access to foreign exchange for businesses.
Emefiele was quoted as saying, “After assessing the various risk profiles available, the committee resolved to adopt the least risky option by adopting a flexible foreign exchange policy to restore the automatic adjustment properties of the exchange rate. It is time to introduce greater flexibility in the management of FOREX market.”
Further, ITRealms reports that the circular insisted that deployment of the FMDQ-advised FX systems will only be to those corporates that have been screened and pre-approved by FMDQ in line with its on-boarding eligibility criteria.
“Therefore, all Authorised Dealers (i.e banks) are to execute all FX trades among themselves and with their clients (Corporate Institutions) through the FMDQ-advised FX systems,” CBN insisted.