The Central Bank of Nigeria (CBN), issued new measures to facilitate naira liquidity and raise diaspora remittances.
In its latest circular, the apex bank stated that eligible International Money Transfer Operators (IMTOs) will now have access to naira liquidity through the bank’s window.
The CBN mentioned that this initiative is intended to broaden access to local currency liquidity, ensuring smoother and more efficient settlement processes for remittances.
The circular, signed by W. J. Kanya, CBN’s Acting Director of Trade and Exchange Department, noted that transactions executed before noon on a trading date will be settled on the same day.
According to the circular, all participants are required to submit daily regulatory returns to the CBN, and these returns must include all relevant information on the sources of funds. The key participants in the segment include IMTOs, authorized dealer banks, and the CBN.
Under the new guidelines, IMTO operators will be able to access the CBN window directly or do so via their Authorised Dealer Banks (ADBs) to execute foreign exchange transactions in the market. The circular outlines specific compliance measures to ensure the effective operation of the initiative.
It also said pricing on the CBN portal will mirror the NAFEX traded rates, which are based on an acceptable market benchmark.
The operation of the segment will follow the existing arrangements in place for authorised dealers involved with foreign portfolio investment in primary market securities auctions.
Also, the circular emphasised that these measures are effective immediately, highlighting the bank’s commitment to maintaining the smooth functioning of the foreign exchange market and improving formal remittance channels.
The decision is expected to significantly improve the liquidity of local currency for diaspora remittances, thereby enhancing the overall efficiency and reliability of the foreign exchange market in the country.
CBN focuses on increasing remittances and naira liquidity:
Recall in May 2024, the apex bank granted 14 IMTOs an approval-in-principle (AIP) in an effort to double foreign-currency remittance inflows through formal channels.
Hakama Sidi Ali, CBN’s Acting Director of Corporate Communications, while announcing the new plan in a statement, said: “This will spur liquidity in Nigeria’s Autonomous Foreign Exchange Market (NAFEX), augmenting price discovery to enable a market-driven fair value for the naira.’’
Similarly, The CBN Governor, Olayemi Cardoso, had recently disclosed the apex bank’s target to double remittance flows into Nigeria within a year, which he firmly believed was possible.
He said, “We are wasting no time driving progress to remove any bottlenecks hindering flows through formal channels permanently. We have a determined pathway and a sequenced approach to tackling all challenges ahead, working hand in hand with key stakeholders in the remittance industry.”
Comments 2