Business Forex: CBN Relaxes Tight Trading Rules on Nigerian Banks

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LequteMan

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Following stagnancy and continued pressure on the Naira, the Central Bank of Nigeria has relaxed rules implemented last month on buying and selling of foreign exchange in the country- rules that were blamed for crushing the Naira.

In a notice published yesterday, the CBN increased the maximum net open foreign-exchange trading positions banks can hold at the end of each business day from zero to 0.1 percent.

Besides, it asked banks to utilise funds purchased from the autonomous/interbank foreign exchange market within 72 hours from the value date.

The Central Bank of Nigeria (CBN) also reviewed the daily foreign currency trading positions of banks. It said that unutilised funds must be returned to the CBN for re-purchase at the bank's buying rate.

The circular urged dealers to ensure strict compliance

According to the apex bank, the circular takes immediate effect.

CBN had tightened rules on foreign-currency trading as the naira slumped and crude prices plunged. The central bank raised interest rates to a record 13 percent in November to stem outflows and Finance Minister Ngozi Okonjo-Iweala proposed cutting this year’s budget by 8 percent. Interbank trading dried up last month after the bank introduced the tighter rules.

The revision “will increase by a little the ability of banks to fund transactions as they can hold dollars for longer,” Pabina Yinkere, head of research at Lagos-based Vetiva Capital Management Ltd., said according to Bloomberg. “There’s not going to be a dramatic boost to trade.”

#Nigeria #Naira

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