Nigeria’s Central Bank Broadens Forex Access for International Money Transfer Operators

Forex access for money transfer operators: The Central Bank of Nigeria (CBN), issued new measures to facilitate naira liquidity and raise diaspora remittances.

The apex bank announced that International Money Transfer Operators (IMTOs) will now be permitted to sell foreign currency on the official window. 

Forex Access for Money Transfer Operators

This initiative is intended to broaden access to local currency liquidity, ensuring smoother and more efficient settlement processes for remittances.

The circular was signed by W. J. Kanya, CBN’s Acting Director of the Trade and Exchange Department. It noted that transactions executed before noon on a trading date will be settled on the same day.

It also outlines that eligible IMTOs can now access the central bank’s window either directly or through authorized dealer banks. 

Transactions will now be conducted based on the prevailing rates in the Nigerian Autonomous Foreign Exchange Market (NAFEM). This is based on an acceptable market benchmark.

New Forex Policy Now Effective 

These new measures are effective immediately. This decision highlights the bank’s commitment to maintaining the smooth functioning of the foreign exchange market and improving formal remittance channels.

The latest policy adjustment is part of the CBN’s ongoing efforts to diminish the influence of the parallel market. 

The policy follows a series of reforms implemented by the central bank in recent months, including a ban on street trading of dollars and a significant increase in capital requirements for Bureau de Change operators.

Forex Access for Money Transfer Operators To Double Remittance Flow Into Nigeria 

With these reforms in place, there’s a little stabilization of the exchange rate, attributed in part to increased foreign currency inflows.

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According to the most recent data available, the naira was trading at 1,488 per dollar on the NAFEM window on Monday.

Parallel market rates were reported to be around 1,500 naira per dollar on the same day.

Hakama Sidi Ali, CBN’s Acting Director of Corporate Communications, while announcing the new plan in a statement, said: “This will spur liquidity in NAFEM, augmenting price discovery to enable a market-driven fair value for the naira.’’

Also, the CBN Governor, Olayemi Cardoso, emphasized his belief that the apex banks will double remittance flows into Nigeria within a year.

He said, “We are wasting no time driving progress to remove any bottlenecks hindering flows through formal channels permanently.”

“Besides, we have a determined pathway and a sequenced approach to tackling all challenges ahead, working hand in hand with key stakeholders in the remittance industry.”

Factors The New Policy Depends On

The success of this policy will depend on various factors. These factors include the continued stability of the naira, the overall performance of the Nigerian economy, and global economic conditions. 

Also, as the policy takes effect, its impact on exchange rates, remittance flows, and the broader financial landscape in Nigeria will be closely monitored to ensure smooth sailing.