CBN Reviews Dealers’ Forex Position to 0.1%

0 0
Read Time:2 Minute, 47 Second

The Central Bank of Nigeria (CBN) on Monday reviewed upward the daily foreign currency trading positions of banks from zero per cent to 0.1 per cent.

In addition, banks are now required to utilise funds purchased from the autonomous foreign exchange market within 72 hours instead of 48 hours.

The central bank gave the directives in a circular titled: “Daily Foreign Currency Trading Positions of Banks and Period for Utilisation of Funds,” dated June 12, 2015, a copy of which was posted on its website.

The circular signed on behalf of the Director, Trade and Exchange Department, CBN, by Mrs. O.l. Ahuchogu was addressed to all authorised dealers.

The CBN had last month reviewed the daily foreign exchange trading position to zero per cent of shareholders’ funds (unimpaired by losses) from one per cent. Also, the central bank had in another circular directed that funds purchased from banks by their respective customers at the autonomous/interbank foreign exchange market must be utilised within 48 hours from the date of purchase or be returned to the CBN for re-purchase at the bank’s buying rate.

However, in the latest circular, it stated: “Further to the Circular Ref: TED/FEM/FPC/GEN/01/029 of December 18, 2014, authorised dealers are hereby notified that the daily foreign currency trading positions of banks been reviewed with immediate effect.

“Accordingly, authorised dealers are required to maintain 0.1 per cent maximum open limit of their shareholders’ fund unimpaired by losses as foreign currency trading position at close of each business day.

“In addition, banks are required to utilise funds purchased from the autonomous foreign exchange market within 72 hours from the value date, failing which such funds must be returned to the CBN for re-purchase at the Bank’s buying rate. Please note and ensure strict compliance.”

Meanwhile, the naira appreciated by about N1.80 kobo against the United States currency yesterday after three oil companies sold the greenback, increasing dollar liquidity on the interbank market, dealers said.

The nation’s currency closed at N181.20 to the dollar, firmer than Friday's close of N183. The naira had weakened to N183 during mid-day trades before the dollar sales, according to Reuters.

Dealers said China's Addax and Itali's Eni sold a combined $19 million while LNG sold an undisclosed amount of dollars to commercial lenders.

The central bank devalued the naira two months ago and in December tightened trading rules to try to curb speculation against the currency, slowing trading to a trickle. The naira had been hard hit by falling oil prices, cutting foreign income for Africa's largest crude producer.

The devaluation of the naira by eight per cent to N160-N176 against the dollar was meant to halt the slide in foreign reserves, but the naira has traded well outside that band – and reserves are still falling.

The Nigerian Interbank Offered Rates (NIBOR) moderated across all tenor buckets amid boost in financial system liquidity. The overnight, 1-month, 3-month and 6-month rates advanced to 9.66 per cent, 13.58 per cent, 14.43 per cent and 14.50 per cent respectively.

However, the 6-month tenor moderated to 15.68 per cent.

0 0 %
0 0 %
0 0 %
0 0 %
0 0 %
0 0 %

Average Rating

5 Star
4 Star
3 Star
2 Star
1 Star

Leave a Reply Cancel reply

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