-Orders banks to set up forex kiosks at airports
CBN statement signed by Issac Okorafor:
“In continuation of efforts to increase the availability of Foreign
Exchange in order to ease the difficulties encountered by Nigerians in
obtaining funds for Foreign Exchange transactions, the Central Bank of
Nigeria (CBN) is providing direct additional funding to banks to meet the
needs of Nigerians for Personal and Business Travel, Medical needs, and
School fees, effective immediately. The CBN expects such retail
transactions to be settled at a rate not exceeding 20 percent above the
interbank market rate.
Travel Allowances:
Having cleared the historic backlog of matured letters of credit at the
inception of the current flexible exchange rate system, the CBN would
immediately begin to provide foreign exchange to all commercial banks to
meet the needs of both personal travel allowances (PTA) and business
travel allowances (BTA) for onward sale to customers. All banks would
receive amounts commensurate with their demand per week, which would be
sold to customers who meet usual basic documentary requirements.
School and Medical Fees:
Similarly, the CBN would meet the needs of parents, guardians and sponsors
who are seeking to make payments of school and educational fees for their
children and wards. Such payments must be made by commercial banks
directly to the institution specified by the customer. The CBN would
ensure that this process is as smooth as possible and that as many
customers as possible get the foreign exchange they genuinely demand. This
would also apply to customers seeking to make payments, or purchase
foreign exchange, for medical bills and paid directly to hospitals. The
supply of FX to retail end-users (PTA, BTA, School fees, medical bills,
etc) would be sustained by the CBN.
Forward Sales Tenor:
In order to further increase the availability of foreign exchange to all
end-users, the CBN has decided to significantly reduce the tenor of its
forward sales from the current maximum cycle of 180 days, to no more than
60 days from the date of transaction.
FX Sales at Major Airports:
In order to further ease the burden of travellers and ensure that
transactions are settled at much more competitive exchange rates, the CBN
hereby directs all banks to open FX retail outlets at major airports as
soon as logistics permit.
Increase Efficiency of FX Market:
In order to maintain confidence in the FX market, the CBN will immediately
take the following steps:
1. Begin implementing its articulated program to clear all the unfilled
orders in the interbank FX market;
Given our plan to meet all unfilled orders, and while provision of FX to
the manufacturing sector would remain the CBN’s strong priority, we will
no longer impose allocation/utilization rules on commercial banks;
2. Implement an effective intervention programme to support the inter-bank
market to ensure adequate liquidity necessary to deliver an efficient FX
market;
Advise FMDQ to activate its FX Order-Book systems as soon as possible and
also accelerate the on-boarding of FX clients on the FX Relationship
Systems to ensure total transparency of the FX market.
Given the CBN’s objective to continuously and vigorously pursue a
transparent, liquid, and efficient FX Market, the Bank reiterates it would
neither tolerate unscrupulous actions nor hesitate to bring serious
sanctions on offenders, be they banks or their staff.
The Bank therefore encourages market participants to assist in ensuring
that these new measures engender the preservation of our external
reserves, stability of our financial system, and growth of our economy to
the benefit of all Nigerians.