CBN Gives Conditions for International Transfer Money Operators To Do FX Transaction
- The CBN has unveiled new programmes designed to boost remittances from the diaspora and naira liquidity
- According to the Central Bank, IMTOs will now have access to naira liquidity through the bank's window
- IMTOs are also expected to do FX transactions in the market directly through CBN window or through their authorised dealer banks
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Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.
The Central Bank of Nigeria (CBN) announced fresh initiatives aimed at increasing naira liquidity and diaspora remittances.
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Eligible International Money Transfer Operators (IMTOs) will now have access to naira liquidity through the bank's window, per the CBN's recent circular.
According to the CBN, the initiative aims to increase access to local currency liquidity and facilitate faster and more effective remittance settlement procedures.
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Ways IMTOs can do FX transactions
IMTO operators will be able to conduct foreign exchange transactions in the market either directly through the CBN window or through their Authorized Dealer Banks (ADBs).
The circular provides specific compliance guidelines to guarantee the effort runs smoothly.
According to the circular, which was signed by W. J. Kanya, acting director of the CBN's trade and exchange department, transactions completed before noon on a trading day will be resolved that same day.
Additionally, it stated that the CBN portal's pricing will align with NAFEX trading rates, which are determined by a respectable market benchmark.
The section will function in accordance with the current policies set forth for authorised dealers participating in foreign portfolio investments in primary market securities auctions.
Every participant must provide the CBN with daily regulatory returns, per the circular. All pertinent information on the funding sources must be included in these returns.
Authorised dealer banks, the CBN, and IMTOs are the main players in this market.
The circular underscored the immediate effectiveness of these measures and reaffirmed the bank's commitment to preserving the efficient operation of the foreign exchange market and enhancing official remittance routes.
It is anticipated that the action will greatly increase local currency's liquidity for remittances from the diaspora, improving the nation's foreign exchange market's overall dependability and efficiency.
CBN prioritises raising naira liquidity
The CBN gave approval-in-principle (AIP) to 14 IMTOs in May 2024 in an attempt to double the amount of foreign-currency remittance inflows through official channels.
The effort aimed to lower the cost of remittance transactions and enhance financial inclusion by encouraging increased competition and innovation among IMTOs, hence increasing the sustainable supply of foreign exchange in the official market.
The CBN reasoned that boosting official remittance flows would lessen the historical volatility of Nigeria's currency rate, which was brought on by outside variables including changes in foreign investment and the revenues from oil exports.
ABCON shares plans to help naira recover
Legit.ng earlier reported that the Association of Bureau de Change Operators of Nigeria (ABCON) announced plans to launch a unified digital trading platform.
Speaking to Legit.ng, Aminu Gwadabe, ABCON president, said the move would help achieve a unified retail end forex market operation.
The ABCON president also revealed plan to create automation policies and platforms for all BDC operations in Nigerian markets.
Proofreading by James Ojo Adakole, journalist and copy editor at Legit.ng.
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Source: Legit.ng
