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In a series of regulatory adjustments, the Central Bank of Nigeria (CBN) has implemented changes aimed at fostering a more flexible foreign exchange market. This article provides an overview of these updates, marking a continuous effort by the CBN to address liquidity, transparency, and market efficiency. Below are the key changes and their implications for international money transfers related to Nigeria.

Update in February 2024:

The Central Bank of Nigeria (CBN) has enacted several regulatory changes to enhance the flexibility of the foreign exchange market. This article outlines these changes, providing a timeline to better understand the evolution of Nigeria's forex policies.

Timeline of Recent Changes in Nigeria's Forex Regulations

September 13, 2023 - Liberalization of Exchange Rates for IMTOs:

• The CBN issued a circular that removed the cap on exchange rates quoted by International Money Transfer Operators (IMTOs), allowing them to base naira payout rates on the prevailing market rates. This change was aimed at improving forex inflow by encouraging market-driven pricing.
• The CBN continued its efforts to consolidate forex segments into the Investors and Exporters (I&E) window to create a unified exchange rate across various market segments, promoting transparency and simplification of the forex market structure.

January 31, 2024 - Introduction of the Willing Buyer, Willing Seller Model:

• The CBN reintroduced the "Willing Buyer, Willing Seller" model at the I&E Window, enabling direct negotiation of exchange rates between buyers and sellers through authorized dealers. This model was reintroduced to better reflect market dynamics and support a balanced exchange rate determination process.
  

Ongoing - Government Transactions at Weighted Average Rate:

• For government-related transactions, the operational rate has been set to the weighted average of the previous day's transactions at the I&E window, aiming for fairness and transparency in government-related forex dealings.

Ongoing - Guaranteed Forex Access for Essential Services:

• The CBN has ensured uninterrupted access to forex for essential services, including BTA/PTA, medical expenses, and school fees, with transactions processed through banks at market rates.

Ongoing Enhancements to Market Operations:

• Adjustments have been made to market operations, including order-based two-way quotes and the introduction of a Central Counter Party (CCP) to clear transactions. These changes aim to improve market transparency and efficiency, with operational hours set from 9 am to 4 pm, Nigeria time.

Ongoing - Adjustments to Trading Limits and Domiciliary Accounts:

• Relaxation of trading limits on forex positions and the removal of restrictions on domiciliary accounts have been implemented to provide greater flexibility in forex transactions.

These regulatory changes by the CBN mark an ongoing effort to make the Nigerian foreign exchange market more flexible and transparent. For individuals and businesses engaged in international money transfers involving Nigeria, understanding these regulatory timelines is crucial for compliance and effective market participation. As the forex regulatory landscape in Nigeria continues to evolve, stakeholders are encouraged to stay informed and adapt their strategies accordingly. You can see the most recent rates for sending money from and to Nigerian here.