The Central Bank of Nigeria (CBN), on Monday, unveiled new measures to boost naira liquidity and raise diaspora remittances.
According to the latest circular issued by the CBN, eligible International Money Transfer Operators (IMTOs) will now have access to naira liquidity through the bank’s window. This initiative is designed to widen access to local currency liquidity, ensuring smoother and more efficient settlement processes for remittances, the CBN said.
Under the new guidelines, IMTO operators will be able to directly access the CBN window or do so via their Authorised Dealer Banks (ADBs) to execute foreign exchange transactions in the market. The circular outlines specific compliance measures to ensure the effective operation of the initiative.
The circular, signed by W. J. Kanya, acting director of the trade and exchange department at the CBN, said transactions executed before noon on a trading date will be settled on the same day.
It also said pricing on the CBN portal will mirror the NAFEX traded rates, which are based on an acceptable market benchmark.
The operation of the segment will follow the existing arrangements in place for authorized dealers involved with foreign portfolio investment in primary market securities auctions.
According to the circular, all participants are required to submit daily regulatory returns to the CBN. These returns must include all relevant information on the sources of funds.
The key participants in the segment include: IMTOs, authorised dealer banks, and the CBN.
The circular emphasised that these measures are effective immediately, highlighting the bank’s commitment to maintaining the smooth functioning of the foreign exchange market and improving formal remittance channels.
The move is expected to significantly improve the liquidity of local currency for diaspora remittances, thereby enhancing the overall efficiency and reliability of the foreign exchange market in the country.
The CBN has focused on increasing remittances and naira liquidity.
In May 2024, it granted 14 IMTOs an approval-in-principle (AIP) in an effort to double foreign-currency remittance inflows through formal channels.
The initiative was targeted at helping to increase the sustained supply of foreign exchange in the official market by promoting greater competition and innovation amongst IMTOs to lower the cost of remittance transactions and boost financial inclusion.
The CBN’s thinking was that increasing formal remittance flows would help ease the historical volatility in Nigeria’s exchange rate caused by external factors such as fluctuations in foreign investment and oil export proceeds.
“This will spur liquidity in Nigeria’s Autonomous Foreign Exchange Market (NAFEX), augmenting price discovery to enable a market-driven fair value for the naira,” said Hakama Sidi Ali, CBN’s Acting Director of Corporate Communications, while announcing the new plan in a statement.
Olayemi Cardoso, CBN Governor had recently disclosed the apex bank’s target to double remittance flows into Nigeria within a year, which he firmly believed was possible.
“We are wasting no time driving progress to remove any bottlenecks hindering flows through formal channels permanently. 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,” he had stated.
>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : Businessday.ng – https://businessday.ng/news/article/cbn-grants-imtos-naira-access-to-boost-remittances/
