UBA ads

The Central Bank of Nigeria has amended some key provisions of the investor window. In a circular dated June 5, 2017, titled Further Liberalization of the Interbank- Foreign Exchange (FX) Market, the CBN moved a step closer towards a more liquid market.

Nitty gritty of the circular

On Spreads

Interbank transactions shall now be subject to a maximum spread of N1. Before now, banks had no limit to its maximum spread.

Likely effect


This could help narrow the rate disparity that currently exist in the interbank market. Currently, rates can range from anywhere between N380 and N400 on the investor window.

On defeasing FX positions

Authorised dealers can defease their excess foreign currency trading positions to fellow authorised dealers without seeking prior approval from the CBN

Standard chartered

Likely effect

Standard chartered

Dealers with excess FX positions that they cannot immediately defray can pass it on to other dealers stimulating liquidity within the FX market.

Report details of transactions


Authorised dealers must now report details of transactions to the CBN by 4pm daily

Likely effect

More transparency towards pricing and liquidity status of the investor window.

What’s the end game


Most analysts we spoke to still believe that the CBN is headed in one direction, albeit cautiously. It will eventually move to a more market determined exchange rate and will eventually achieve a rate convergence.

For now, it needs to ensure that liquidity in the market continues to flow while pricing is determined with minimalist manipulations. It also continues to sell FX across other windows as a way to ensure stability and insulate the FX window against the smaller but more infectious parallel market.

Stay pumping

On Monday, the Bank injected another $190 million- $100 million for wholesale forwards, $50 million in its MSME window and $40 million for business and travel allowances. This intervention brings the amount of CBN intervention to around $5 billion in a little less than 5 months.

Download (PDF, 499KB)



Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.