Without too many dogo turenchi, with this press statement, the Naira has been liberalised, which could mean appreciation or devaluation of the Naira depending on our trade deficit, export, import and forex earnings.

DropShot:

please do justice. Rule 2 broken.

what are you saying?

Yeye policy abeg make i sip my zobo jor

doyinisaac:
I have alternative monikers.. even if they ban me till eternity... omo ale...

Mynd44 Lalasticlala Seun, why are you allowing touts behave as they like here?

Which implies that you can pay for goods and services with €$£

"CBN finally floats the naira" please what does this mean?

Someone should educate us na

What is the essence of introducing over the counter FX futures, when there is over the counter forwards?

It is good that non-oil exporters are allowed into the FX market to increase the supply side chain of FX. This will allow inflow of FX currency especially the dollar to come into the country. However, the CBN must finalize arrangement for yuan trade.

Allowing market forces to determine the exchange rate is good. We hope these measures enable the naira to gain considerable strength, but I doubt that given our trade deficits and huge import dependency. However, this may assist to reduce round tripping frequently perpetrated by Banks and politicians who have unrestricted access to the dollar.

Now the CBN should make effort to streamline our interest rate to reflect the economic recession we are facing as they have done for the FX. Once this is done, we may begin to see short-long term economic boom

not until bank start paying recipient in the said foreign remittance currency e.g $ € £ foreign transaction (money gram, Western Union, e.t.c) this whole thing is still a scam and won't get any better.

Jengem:
Even me that I have certificate I dont understand, how much less Bubu

Who your certificate epp?

Na wa ooo our currency has been devaluated....
For more info visit www.hiddensecretsofmoney.com

DropShot:

Mynd44 Lalasticlala Seun, please do justice. Rule 2 broken.

E pain you...he has schooled you and all you can.do is cry like a baby

Na Wa for this kain change oo

doyinisaac:
what are you saying?

E pain.em. Don't mind the fella, you schooled him and all he can.do is cry and whin like a baby..

[s]

Abagworo:
In summary CBN has ceased interference with exchange rate. Consequently the exchange rates will be based strictly on demand and availability. I don't see Naira losing much value as it will remain within the 300 to 400 vicinity against the US Dollar.

[/s]

lafuria1:

What is simply new is that they won't be anything like black market or parallel market and cbn official rate.
The cbn official rate was 199 naira to a dollar which is fixed and not market determine by supply and demand. what that meant is that some get to by dollars at 199 while does who can't buy it 350 from BDC. With this new policy, no more such, one single exchange rate, one single market,
Parallel market is as a result of the fixed rate policy.
This floating policy is way different from the existing policy we have been using.

Boss13:
What is the essence of introducing over the counter FX futures, when there is over the counter forwards?
It is good that non-oil exporters are allowed into the FX market to increase the supply side chain of FX. This will allow inflow of FX currency especially the dollar to come into the country. However, the CBN must finalize arrangement for yuan trade.
Allowing market forces to determine the exchange rate is good. We hope these measures enable the naira to gain considerable strength, but I doubt that given our trade deficits and huge import dependency. However, this may assist to reduce round tripping frequently perpetrated by Banks and politicians who have unrestricted access to the dollar.
Now the CBN should make effort to streamline our interest rate to reflect the economic recession we are facing as they have done for the FX. Once this is done, we may begin to see short-long term economic boom

Thanks for the analysis jare. I hope some ignorants wailing about will learn.

happney65 oya come receive lecture. Nairaland economic team don explain wetin CBN do. Come and take 1 lollipop and stop wailing about.

In as much as not deriding the intelligence of this forum but this issue discussed today has revealed how much knowledge an average nairalander have in economics.

To sum it up,
There will be no more parallel forex rate differentials; Round tripping of the dollar is aborted; the naira to dollar exchange rate been market controlled with less state intervention will trade in the range of #340-#400+ per dollar until there is an improvement in our economy.

Finally, this is a case of naira been devalued but technically hidden from the average man on the street. Thus, the merits and demerits of devaluation we are bound to see from now!
Thanks friends!

elvisdaniels:


E pain you...he has schooled you and all you can.do is cry like a baby

Displaying of characteristics of a typical tout/thug only confirms lack of decent upbringing. Not evidence of "schooling" anyone.

Say we dey online dey play together no mean say we be mate by any measure.

A word of caution. This policy does not mean the elimination of parallel market rate. Let me explain

What the government has done is to deregulate the foreign exchange market. In a layman's term, it means removing government determination of foreign exchange rates. Dollars that was previously fixed at N197/199 would now be traded in the interbank market, and therefore exchange rates determined between the various banks.

If you take a school fees payment request to bank A for instance, the bank would give you a rate after getting a quoting from a seller (which can be other banks or themselves, if they have stock of fx) and this becomes the rate you would buy the fx for your school fees payment. if you are unhappy with what bank A quoted, you can approach bank B and attempt to get a cheaper quote

Banks can now source for foreign exchange from various sources, including non oil exporters and purchase at the rate they (the banks) are willing to pay, no longer the rate the government said they must! But this isn't really a favourable factor for exporters if interbank fx rates (which is the rate the banks would buy the export proceeds) are lower than what the exporters can get from the black market. The best case would have been to allow exporters access to their inflows and let them decide whomever they wish to sell to, whether it is the banks or mallams on the street!! This is what would boost supply.

However you would find that the interbank rates in foreign exchange would likely continue to trail those of the parallel Market rates. The trick is if the banks have a deep market/stock to meet all the request from customers, which would mean there would be no incentive to patronise the parallel market for fx buyers. Thi is because the bank's rate would be lower than parallel market rates. I do not forsee this scenario likely as our foreign reserve remains low, which is the buffer for CBN interventions. All other sources are already known and utlilized at present so where would the higher fx supply come from?

There are other new features of this policy but I do not think those are of interest to a majority of us here

With this, the price will still be above N300. If demand is high, it will knock N400

All effort of CBN Is to pretend that naira is yet to be devalued through d reduction of the margin gap between parallel and cbn rate. But unfortunately they are deceiving themselves because d parallel market will still continue to determine normal market price since availability will continually by stiffen by cbn to control devaluation. Fellow citizen,continue to c d exchange rate at not less than #500 in the most nearest future. U can benefit from d disguised devaluation here

DropShot:

Displaying of characteristics of a typical tout/thug only confirms lack of decent upbringing. Not evidence of "schooling" anyone.

Say we dey online dey play together no mean say we be mate by any measure.

Lol, you.come online to.brag about age and achievements..You don't need to use the internet then.,cos nairaland.is a faceless site for everyone ..no exceptions FYI.. keep your mate measure to yourself ,cuz what you feel that you have achieved may not be measured to what I have and achieved myself ..Peace

amaechi1:


Must you display how you are? You should be ashamed that you have you certificate and you could not understand. Seek counsel and stop insulting people that did not know if you are in existence.

Explain to people who don't know. They are open and honest. Stop shouting with unnecessary insults.
Guys those who know better are still at work. The real explanation will manifest from 7pm. Be patient.

elvisdaniels:


Lol, you.come online to.brag about age and achievements..You don't need to use the internet then.,cos nairaland.is a faceless site for everyone ..no exceptions FYI.. keep your mate measure to yourself ,cuz what you feel that you have achieved may not be measured to what I have and achieved myself ..Peace

Na you be the guy?

Abi why you dey use panadol for another man's headache.

Anyone with a decent upbringing and achievement will not behave like a tout unprovoked.

DropShot:

I doubt you have any credible certificate.

Some certificates are not worth the piece of paper they're printed on. Yours surely is such.

And get over the election loss trauma. The loss is irreversible.

hey you work credible certificate, why not explain the whole policy review in layman's language?

DropShot:

I doubt you have any credible certificate.

Some certificates are not worth the piece of paper they're printed on. Yours surely is such.

And get over the election loss trauma. The loss is irreversible.

hey you work credible certificate, why not explain the whole policy review in layman's language? ITK !

Please see full guidelines as released by the CBN. I retract my previous statement on over-the-counter Futures. This is very good for hedging FX fluctuations and I support that a formalised market be established for it. Welcome development.

However, for those who would not read it. It is official. Nigeria has devalued its currency in view of its economic challenges and illiquidity in the FX market.

New guidelines for the operation of the Nigerian Inter-Bank FX Market

1.0 Introduction

In line with the objectives of enhancing efficiency and facilitating a liquid and transparent, Foreign Exchange (FX) market, the Central Bank of Nigeria (CBN) hereby releases the revised guidelines on the operations of the Nigerian Inter-Bank FX market towards the liberalisation of the market.

2.0 Guidelines

The CBN shall operate a single market structure through the autonomous/inter-bank market i.e. the Inter-Bank Foreign Exchange Market with the CBN participating in the FX market through interventions (i.e. CBN Interventions) directly in the inter-bank market or through dynamic “Secondary Market Intervention Mechanisms”.

Furthermore, to promote the global competitiveness of the market, the inter-bank FX market will be supported by the introduction of additional risk management products offered by the CBN and Authorised Dealers to further deepen the FX market, boost liquidity and promote financial security in the market.

Additionally, to further improve the dynamics of the market, the CBN shall introduce FX Primary Dealers (FXPDs). These shall be registered Authorised Dealers designated to deal with the CBN on large trade sizes on a two-way quote basis. amongst other obligations as stated in the FXPD Guidelines – (Guidelines for Primary Dealership in FX Products). The FXPDs shall operate with other Authorised Dealers (non-FXPDs) in the Inter-bank market.

2.1 Inter-bank Foreign Exchange

Market 2.1.1

Participants in the inter-bank FX market shall include Authorised Dealers, Authorised Buyers, Oil Companies, Oil Service Companies, Exporters, End-users and any other entity the CBN may designate from time to time.

2.1.2 Authorised Dealers shall buy and sell FX among themselves on a two-way quote basis via the FMDQ Thomson Reuters FX Trading Systems (TRFXTConversational Dealing), or any other system approved by the CBN.

2.1.3 Authorised Dealers may offer one-way quotes (bid or offer) on all products and on request to other Authorised participants via the FMDQ Thomson Reuters FX Trading System (FMDQ TRFXT – Order Book System), or any other system approved by the CBN.

2.1.4 The maximum spread between the bid and offer rates in the inter-bank market shall be determined by FMDQ OTC Securities Exchange (FMDQ) via its market organisation activities with the Financial Market Dealers Association (FMDA).

2.1.5 Proceeds of Foreign Investment Inflows and International Money Transfers shall be purchased by Authorised Dealers at the inter-bank rate.

2.2 HEDGING PRODUCTS

2.2.1 To further deepen the FX market, in addition to the already approved hedging products referenced in the CBN “Guidelines for FX Derivatives and Modalities for CBN FX Forwards”, Authorised Dealers are now permitted to offer Naira-settled non-deliverable overthe-counter (OTC) FX Futures.

2.2.2 OTC FX Futures’ transactions shall be nonstandardised with fixed tenors and bespoke maturity dates.

2.2.3 OTC FX Futures sold by Authorised Dealers to endusers must be backed by trade transactions (visible and invisible) or evidenced investments.

2.2.4 FMDQ will provide the appropriate benchmarks for the valuation and settlement of the OTC FX Futures and other FX derivatives.

2.2.5 FX OTC Futures and Forwards will count as part of the FX positions of Authorised Dealers.

2.2.6 To promote market liquidity, Authorised Dealers may apply FX Spot transactions to hedge Outright Forwards, OTC FX Futures and FX Options etc.

2.2.7 Settlement amounts on OTC FX Futures may be externalised for Foreign Portfolio Investors (FPIs) with Certificates of Capital Importation. Such settlement amounts shall be evidenced by an FMDQ OTC FX Futures Settlement Advice.

2.2.8 Furthermore, FMDQ will be developing detailed registration and operational regulation on FX Options and will drive, with the market, the development of other risk management products and attendant guidelines.

2.3 Foreign Currency Trading Position

2.3.1 Further to the CBN Circular Ref: TED/FEM/FPC/GEN/01/001 dated 12th January 2015, Authorised Dealers, (FXPDs and non-FXPDs) are hereby notified of a review in the daily Foreign Currency Trading Positions of banks. Consequently, Authorised Dealers shall have maximum limits of +0.5%/-10% of their Shareholders’ Funds unimpaired by losses as Foreign Currency Trading Position Limits to support their obligations as liquidity providers at the close of each business day.

2.3.2 Where an Authorised Dealer requires a higher position limit to accommodate a customer trade, the Authorised Dealer shall contact the Director, Financial Markets Department. Where the request is assessed as valid, the Director shall communicate immediate approval by text or email to the Authorised Dealer. Thereafter, the Authorised Dealer must, with 24 hours, write to the Director, Financial Markets Department who will thereafter communicate an approval in writing. The Director, FMD shall exercise discretion on the duration of the temporary position limit depending on the estimated defeasance period of the transaction size.

2.3.3 Returns on the purchases and sales of FX shall be rendered daily to the CBN by Authorised Dealers.

2.3.4 Inter-bank funds shall NOT be sold to Bureaux-deChange.

2.3.5 The forty-one (41) items classified as “Not Valid for Foreign Exchange” as detailed in the CBN Circular Ref: TED/FEM/FPC/GEN/01/010, remain inadmissible in the Nigerian FX market. 2.3.6Applicable exchange rate for the purpose of import duty payments shall be the daily inter-bank FX closing rate as published on the CBN website.

2.4 CBN INTERVENTIONS

2.4.1 Participation in the FX market by the CBN shall be via: i. The Inter-Bank FX Market ii. Secondary Market Intervention Sales (SMIS)

2.4.2 Intervention Through the Inter-Bank FX Market

The CBN reserves the right to intervene in the inter-bank market to either buy or sell FX Spot upon the receipt of valid two-way quotes on the standard amount as defined from time to time in the FXPD Guidelines.
CBN may also intervene in the inter-bank market by placing orders for non-standard amounts in the FMDQ TRFXT – Order Book System., or any other system as approved by the CBN.
There shall be no predetermined spread on FX Spot transactions executed through CBN intervention with the FXPDs.
The CBN reserves the right to intervene in the inter-bank market to either buy or sell FX Forwards upon the receipt of valid two-way quotes on the standard amount as defined from time to time in the FXPD Guidelines.
To enhance liquidity, CBN shall also offer nondeliverable OTC FX Futures (bid or offer) daily on the FMDQ OTC FX Futures Trading & Reporting System.
The OTC FX Futures shall be in non-standardised amounts and different fixed tenors which may be sold on any date thereby giving bespoke maturity dates.
FXPDs may purchase OTC FX Futures for their own accounts or sell to other Authorised Dealers and end-users. viii. There shall be no maximum spread on the sale of the Forwards and OTC FX Futures purchased from CBN by FXPDs to Authorised Dealers and endusers
2.4.3 Secondary Market Intervention Sales (SMIS)

The CBN may, at its discretion, intervene in the FX market through the sale of FX to Authorised Dealers (wholesale) or to end-users through Authorised Dealers (retail) via a multiple-price book building process using the FMDQ-Thomson Reuters FX Auction Systems, or any other system approved by the CBN. All SMIS bids shall be submitted to the CBN through the FXPDs.
SMIS – Wholesale:

All FX Spot purchased by Authorised Dealers are transferable in the inter-bank FX market.
CBN may offer long-tenored FX Forwards of 6 – 12 months or any tenor to Authorised Dealers. o Sale of FX Forwards by Authorised Dealers to end-users must be tradebacked. There shall be no predetermined spread.
FX Forwards purchased by Authorised Dealers are transferable in the inter-bank FX market.
SMIS – Retail:

All FX Spot purchased by Authorised Dealers for end-users shall be for eligible transactions only upon the provision of appropriate documentation.
FX Spot sold to any particular end-user shall not exceed 1% of the overall available funds on offer at each SMIS session.
CBN may offer FX Forwards to endusers through Authorised Dealers and may limit the amount sold to an individual end-user o All FX Forwards sales to end-users must be trade-backed.
There shall be no maximum spread on the sale of FX Forwards by Authorised Dealers to end-users.
3.0 Execution and Reporting

2.5 To ensure effective monitoring of the FX market, all Authorised Dealers and end-users are required to trade only on FMDQ-advised FX Trading System(s). All transactions not executed on the Trading Systems shall be voice reported on the Trading Systems.

2.6 All FX transactions by Authorised Dealers are to be reported to FMDQ via the FMDQ-advised FX Reporting System. CBN will be granted access to this system.

4.0 Sanctions

Authorised Dealers are enjoined to comply with the provisions of these Guidelines, failing which appropriate sanctions shall be imposed, including suspension of the FXPD, Authorised Representatives of the Authorised Dealer, suspension of Authorised Dealer from the FX market and/or withdrawal of the Authorised Dealership Licence.

For the avoidance of doubt, all Authorised Dealers are to refer policy issues in respect of which they are in doubt to the Director, Financial Markets Department, Central Bank of Nigeria for clarification.

5.0. Primacy of the Guidelines

These Guidelines supersede:

Circular Ref: TED/FEM/FPC/GEN/01/020 dates October 28, 2014 titled “Guidelines on the Operation of CBN Interventions in the Inter-Bank Market through the Two Way Quote System”.
All other prior Circulars and Guidelines on the subject matter. Please be guided
Issued 15th June 2016

The good thing is the woman selling garri in the market won't increase her price claiming dollars don increase.

I've been against floating of the naira because of greed bankers but over time I see that the fixed rate didn't eliminate that greed, rather it created cheap millionaires over night, one person goes to CBN and buys dollars for 199 naira, quickly goes to BDC sells it for 290 naira, almost 100% profit for doing nothing, with the new policy, no such thing.

If you hear how bankers make money selling dollars eh, the people who need the dollars don't get it official rate so whats the point of having an official rate of 199 naira.

Dangote will be getting cheap dollars at 199 naira per dollars while students who need to pay school fees or those with medical needs abroad get it at 320 naira per dollar.

Oil prices are down, revenue are down, reserve is running down trying to defend the naira for the common man but this common man still get it at an expensive rate, nothing is being achieved with fixed policy save making few people richer for doing nothing,.

If you are a business man you will know there is an unhealthy competition in the market. People that have connections will buy dollar at 199 and you that don't have will buy at 350
When the goods arrive you cannot saale untill those that bought at 199 finish there products
But now with the changes everybody will be buying dollars at the same rate. This is good for business..

Jengem:
Even me that I have certificate I dont understand, how much less Bubu

forgery certificate abi,
hmm, u remain waste to ur generation

In essence, the naira will be devalued after much deliberations.
Balance in domicilliary account will be pegged to a very minimum amount.
Restrictions on fx will be lifted, hence the price crashes.

Hopefully, we get a stable market which will harmonize our trade deficit.