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The Central Bank of Nigeria (CBN) has taken a significant step in its commitment to liberalize the Nigerian foreign exchange market by removing the allowable limit on exchange rates quoted by International Money Transfer Operators (IMTOs). In a circular addressed to both IMTOs and the general public, Dr. Hassan Mahmud, the Director of the Trade and Exchange Department at the CBN, announced this pivotal decision.
Mahmud clarified that IMTOs are now permitted to quote exchange rates for Naira payout to beneficiaries based on the prevailing market rates at the Nigerian foreign exchange market, following the willing seller, willing buyer principle.
The circular explicitly stated, “For the avoidance of doubt, by this circular, the cap on the allowable limit of -2.5 per cent to +2.5 per cent around the previous day’s closing rate of the Nigerian Foreign Exchange Market is hereby removed.”
Authorized dealers, IMTOs, and the general public were urged to take note of this development and comply accordingly. This move aligns with the CBN’s strategy to foster a more open and flexible foreign exchange market.
Prior to this directive, the apex bank had instructed Deposit Money Banks (DMBs) to divest their excess dollar stock as part of an effort to stabilize the exchange rate. Furthermore, the CBN warned DMBs against hoarding excess foreign exchange currencies for profit motives.
In response to the evolving situation in the foreign exchange market, some Bureaux De Change in Abuja implemented a “no sales” policy on Thursday due to the acute scarcity of foreign exchange.
This development marks a significant shift in the CBN’s approach, reflecting its dedication to creating a more dynamic and market-driven foreign exchange environment. The removal of restrictions on exchange rate quotes by IMTOs is anticipated to contribute to increased transparency and efficiency in the Nigerian foreign exchange market.
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