FOREX Nigeria: Guidelines for the Operation of the New Foreign Exchange Regime

The Governor of the Central Bank of Nigeria (CBN) held a press conference yesterday (15 June 2016) to introduce its flexible exchange rate policy. We have summarized below the guidelines for the operation of the new foreign exchange regime:

  • The foreign exchange market will now operate as a single market through the Interbank Foreign Exchange Market (IFEM).  Participants in the IFEM will 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
  • Authorised Dealers are now permitted to buy and sell foreign exchange among themselves on a two-way quote basis via the FMDQ Thomson Reuters foreign exchange trading systems( TRFXT- Conversional Dealing), or any system approved by the CBN
  • Exchange rates will now be determined by market forces
  • There will no longer be spread restrictions
  • The applicable exchange rate for the purpose of import duty payments shall be the daily IFEM foreign exchange closing rate as published by the CBN
  • Proceeds of foreign investment inflows and international monetary transfers shall be purchased by Authorised Dealers at the IFEM
  • The CBN will participate in the IFEM through periodic direct interventions or dynamic “Secondary Market Intervention Mechanisms”
  • Primary Dealers will now be registered to deal directly with the CBN for large deal sizes on a two-way quote basis. These dealers, which will be appointed and notified by Friday, 17 June 2016, will operate with other Authorised Dealers
  • The 41 items listed as “Not Valid for Foreign Exchange” in the CBN Circular of 23 June 2015, will remain ineligible for foreign exchange on the IFEM
  • The CBN may now offer long-tenor foreign exchange forwards to Authorised Dealers
  • Sale of foreign exchange forwards must now be trade-backed, and with no pre-determined spread
  • Over-the-counter foreign exchange futures will be introduced. Such futures may be bespoke and of non-standard volume
  • Non-oil exporters are now allowed unfettered access to their foreign exchange proceeds, which shall be sold on the IFEM
  • IFEM trading under the new guidelines will begin on Monday, 20 June 2016.

Please find attached a copy of the Revised Guidelines for Flexible Exchange Rate MarketJune 2016 v1 for the Operation of the Nigerian Inter-bank Foreign Exchange Market.

For further enquiries on the above, please contact:

Victor Onyenkpa

About Femi Oke

Relentless passion for creativity and digital acumen to help a professional services firm thrive in the digital space. Femi is an individual with a rich experience on regional African knowledge, its diverse business culture and he understands the continent’s economic drive. He thrives on selfless service and lasting mutually beneficial relationships with colleagues and especially clients encountered in the course of his duties. He is creative, practical and self-motivated with business judgement in corporate, brand and strategic communications, social, digital & traditional media and executive profiling. Roles in the firm include New Media, Digital Communication, Corporate Communication, executive profiling and Brand Management execution. Working on the multi-million dollar Africa high growth market project stands out for femi; besides this, managing all KPMG’s digital communication for the World Economic Forum on Africa is another project that gives him great delight. Femi holds a Masters Degree in Global Marketing from the University of Liverpool.

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