Nigerian Naira Crashes Against the Dollar As Interbank Market Opens

8. CBN may offer long-tenored FX forwards

Nigeria’s naira was quoted at 253 against the U.S. dollar as a new interbank market opened on Monday but no trades were yet to be agreed, dealers said.
Nigeria’s central bank said last week it would scrap its fixed exchange system which has seen the currency pegged at 197 to the U.S. dollar for the past 16 months. By this development, the Naira has lost about N47 on the inter bank market. However, the Naira is exchanging at about N340 to the Dollar in the Black Market.

Below are new CBN Forex Market Guidelines

Summary of the Press Conference held by the Governor of the Central Bank on the Flexible Exchange Rate Policy

1. The Market will operate as single market through the interbank

2. The FX Rate will be purely market-driven

3. CBN will participate through periodic interventions
Godwin-Emefiele

4. FX primary dealers will be registered to deal directly with the CBN for large deal sizes.

5. FX primary dealers will deal with other authorised dealers

6. There will be no more spread restrictions

7. The 41 items classified for not valid for FX are still not admissible in FX interbank market

9. Selling of FX forwards must be trade backed with no pre-determined spreads

10. Over the Counter FX futures will be introduced. The OTC FX futures are bespoke and volumes could be non-standard

11. Non-oil exporters are now allowed unfettered access to export proceeds via the interbank market
Timelines

12. Guidelines of the general FX market will be
released immediately

13. Guidelines for FX primary dealers will be released immediately

14. FX primary dealers will be appointed and notified by June 17, 2016

15. Interbank FX trading under the new guidelines will begin on June 20, 2016

Additional details will be released as soon they are published by the Central Bank.

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