Central Bank of Nigeria Announces Removal of Spread on Foreign Exchange Transactions
Abuja, February 8, 2024 - In a significant move to bolster market-based pricing, the Central Bank of Nigeria (CBN) has announced the removal of the spread on interbank foreign exchange transactions. This decision, part of the ongoing foreign exchange market reforms, aims to foster a transparent and dynamic price discovery system.
Under the directive outlined in the FMD/DlR/PUB/ClR/001/012 circular dated February 8, 2024, all authorized dealers are now mandated to operate on a "Willing Buyer and Willing Seller" basis. This discontinuation of any cap on the spread and the lifting of restrictions on the sale of interbank proceeds mark a departure from previous regulatory constraints.
Dr. Duke, Omolara Omotunde, Director of the Financial Markets Department at the CBN, emphasized the importance of maintaining high ethical standards in foreign exchange dealings. Authorized Dealers are expected to adhere strictly to ethical practices, including transparent price disclosures throughout their transactions.
The central bank urges the immediate recording of all executed transactions on relevant treasury systems, with mandatory reporting to market authorities as stipulated. This measure aims to enhance accountability and regulatory oversight in the foreign exchange markets.
The removal of the spread is seen as a step towards creating a more competitive and efficient foreign exchange market in Nigeria. Market participants are expected to adapt to the new framework, fostering increased liquidity and a more robust price discovery mechanism. The move aligns with the CBN's broader efforts to modernize and liberalize the nation's financial markets.
For further inquiries and information, authorized dealers and stakeholders can contact the Financial Markets Department through the provided contact details or visit the CBN website.
Contact:
Central Bank of Nigeria
Financial Markets Department
Plot 33, Abubakar Tafawa Balewa Way,
Central Business District
P.M.B 0187, Garki, Abuja - Nigeria.
Email: fmd@cbn.gov.ng
Website: www.cbn.gov.ng
Phone: +234 700 -225-5226, +234 800-225-5226
Note: Duke, Omolara Omotunde. (Ph.D.), serves as the Director of the Financial Markets Department at the Central Bank of Nigeria.
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