Study Forged New Forex Arrangement
Nigeria’s Central Bank announced last May 2005 that a new foreign exchange market arrangement will be implemented based on the results of the study it commissioned last 2004.
The study revealed that the foreign exchange market lacked discipline and that there was a need to implement a tighter rules-based system to manage the country’s scarce foreign exchange resource. It cited that the primary problem of the current foreign exchange market dealt with the malpractice of the round tripping of funds by licensed banks.
With the new policy, not all licensed banks will be made an authorized to dealer. Thus, only a few banks will be made eligible to participate in the foreign exchange market. Banks who are authorized and licensed would be easily sanctioned in the event the moment they break the rules. With proper implementation, the exchange rate would always be managed to reflect market fundamentals, with the market premium gap narrowed to not more than 3.0%.
Highlights of CBN Coming With A New Forex Market Deal, Vanguard Online
The study revealed that the foreign exchange market lacked discipline and that there was a need to implement a tighter rules-based system to manage the country’s scarce foreign exchange resource. It cited that the primary problem of the current foreign exchange market dealt with the malpractice of the round tripping of funds by licensed banks.
With the new policy, not all licensed banks will be made an authorized to dealer. Thus, only a few banks will be made eligible to participate in the foreign exchange market. Banks who are authorized and licensed would be easily sanctioned in the event the moment they break the rules. With proper implementation, the exchange rate would always be managed to reflect market fundamentals, with the market premium gap narrowed to not more than 3.0%.
Highlights of CBN Coming With A New Forex Market Deal, Vanguard Online
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