The Central Bank of Nigeria (CBN) is suggesting that the new band for the naira, pending the direction of market forces, will be between 260 and 270 to the dollar.

Godwin Emefiele, the CBN governor, had said the position of the naira will be driven by market forces, but in a new document uploaded by the apex bank, it was further explained that the new regime would kick off at the the OTC foreign exchange futures contract rate of N260 to a dollar.

“The market shall operate as a single market structure through the inter-bank/autonomous window; the Exchange Rate would be purely market driven using the Thomson-Reuters Order Matching System as well as the Conversational Dealing Book,” Emefiele said while unveiling the new policy.

“The CBN would participate in the Market through periodic interventions to either buy or sell FX as the need arises,” he adds.

In the document, ‘how the naira-settled OTC FX futures market will work on FMDQ OTC securities exchange (FMDQ), it was explained that dealers (banks) will buy “Naira-settled OTC FX Futures are Non-Deliverable Forwards” of $1,000,000 at N270 to the dollar — N10 higher than OTC FX rate.

“It is assumed that Bank A would have transacted (bought USD in the Spot FX market) at $/₦270 which is higher than the OTC FX Futures contract rate of $/N260.

“The Clearing House, NIBSS, will pay Bank A N10,000,000 (i.e. N10 [N270-N260] per USD) thereby bringing Bank A’s effective rate to $/N260 (N270 assumed paid in buying USD less N10.00 received on the OTC FX Futures) which is the OTC FX Futures rate.

“CBN is assumed to have transacted (sold USD in the Spot FX market) at $/N270 which is higher than the OTC FX Futures contract rate of $/N260.

“The Clearing House, NIBSS, will take N10,000,000 (i.e. N10 per USD) from the Margin Account of the CBN thereby bringing CBN’s effective rate to $/N260 (N270 assumed received in selling USD less N10 paid out on the OTC FX Futures) which is the OTC FX Futures rate.

“If NIFEX had been $/N250 on maturity date, Bank A would pay CBN N10 per USD.”

Op this your moniker sef na wa.

lifezone247:
Op this your moniker sef na wa.

What about it?

how dollar go come be

@OP I find your information very confusing and unbelievable. The association of Fx marketers are yet to meet to discuss on the rate and spread/margin. Whilst I may agree with the rate you indicated, I do not understand how clearing house in Marina responsible for locally dominated transactions be responsible in buying FX.

Please note the CBN has said there will be primary and non-primary Fx dealers. The primary dealers will comprises mainly of 10 financial institutions based on liquidity, capital, amount of Fx transactions it has undertaken in the past.

Hence, it is unwise to spread and distort information, especially when the main players are yet to decided.

Be guided!

A Government on auto pilot, driven by media pressure and talk-show economists.

Empty brains, implementing the obvious when the sick is six feet beneath the ground.

MadamExcellency:
A Government on auto pilot, driven by media pressure and talk-show economists.

Empty brains, implementing the obvious when the sick is six feet beneath the ground.

If a government is driven by media pressure it depicts that the government is a listening one. The media is the conscience of the people. Hence, I don't get your point. The CBN is trying to solve a problem, the least you can do is support.

I don't know who you are referring to as empty brains, but certainly not the CBN. However, I can deduce your brain cells are filled more with water based on this comment you just posted. Please prove me otherwise by posting something more meaningful and intelligent.

989900:


This was an adjunct from the CBN later last night.

It is from the Cable; I can't post the link, because each time I post any link on NL since some 3 days now, I automatically get a 1 day ban.

You can search about it too.

However, what this article is essentially saying is, trading would probably kickoff from the N260-N270 band, from whence it could either go south or north from there, dependent on demand and supply.

We all know which direction it will go. A very nice way of dressing devaluation, which of course was inevitable.

This is a nice one. I hope our importers will bring down the cost of their items.

989900:


This was an adjunct from the CBN later last night.

It is from the Cable; I can't post the link, because each time I post any link on NL since some 3 days now, I automatically get a 1 day ban.

You can search about it too.

However, what this article is essentially saying is, trading would probably kickoff from the N260-N270 band, from whence it could either go south or north from there, dependent on demand and supply.

Thanks for the clarification. I will contact insider source to confirm. On the other hand, if you cannot get the link, you can type the source. This will add credibility to your information.

Thanks again.

Boss13:


Thanks for the clarification. I will contact insider source to confirm. On the other hand, if you cannot get the link, you can type the source. This will add credibility to your information.

Thanks again.

Source: The cable