Two weeks after opening a special Forex window for Small and
Medium Enterprises (SMEs), the Central Bank of Nigeria (CBN) on Friday,
established a Forex widow for investors and exporters.
The Bank’s Director in charge of Financial Markets, Dr
Alvan Ikoku,in a circular, said the purpose of the window was to boost liquidity
in the forex market and ensure timely execution and settlement of eligible
transactions.
Ikoku listed eligible transactions under the new window to
include invisible transactions such as loan repayments, loan interest payments,
Dividends, Income Remittances, Capital Repatriation, Management Service Fees
and Consultancy fees.
Also on the eligible list are Software subscription fees,
Technology Transfer Agreements, Personal Home Remittances and other eligible
transactions including ‘miscellaneous Payments’ as detailed under Memorandum 15
of the CBN Foreign Exchange Manual.
Ikoku said the invisible transactions under this window
excluded international airlines ticket sales’ remittances.
He said that the window covered Bills for Collection and any
other trade-related payment obligations, which are at the instance of the
customer.
Ikoku further clarified that the permitted invisible
transactions and Bills for Collection were eligible to purchase foreign
currency sourced from the CBN Forex window limited to Secondary Market
Intervention Sales (SMIS) Wholesale, that is Spot and Forwards sales.
“International airlines ticket sales’ remittances shall only
be eligible to access the CBN FX window (SMIS-Retail and Wholesale) spot and
forwards.
“The supply of foreign currency to the window shall be
through portfolio investors, exporters, authorised dealers and other parties
with foreign currency to exchange to Naira.
“The CBN shall also be a market participant at the window to
promote liquidity and professional market conduct,” he said.
The CBN said participants at the new window would trade via
telephone until appreciable progress is made with the FX trading systems
on-boarding process, which is the FMDQ OTC Securities Exchange (FMDQ) Thomson
Reuters FX Trading & Auction Systems.
Ikoku advised authorised dealers to promote market
transparency by encouraging their corporate clients to ensure the activities of
the window are operated on the forex trading systems.
As part of the operational requirements of the window, Ikoku
said the exchange rates of the transactions in the window shall be as agreed
between authorised dealers and their counterparties.
He also said that the CBN reserved the right to intervene as
a buyer or seller, as it deems fit, in the window, adding that information on
transactions between authorised dealers would be reported to the CBN on a daily
basis.
It will be recalled that the CBN had injected over 380
million dollars into several segment of the foreign exchange market this week
alone with hope of improving FX liquidity in the market and firm up the value
of the Naira.
(NAN)
