Nigeria's Forex Regulations: What to Pay Attention
Oya, make we yan about Naija forex rules! Whether you dey send money go Nigeria or bring am come out, this guide go show you wetin you need sabi about the CBN forex regulations wey dey shape our market today and for future. Are you transferring money to or from Nigeria? Stay updated with the latest forex regulation changes announced by the Central Bank of Nigeria (CBN) in 2023.
The 2023 Forex Regulation Changes in Nigeria - Highlights:
Unified Forex Market: The CBN announced significant changes to consolidate various forex segments into the Investors and Exporters (I&E) window. This move aims to boost foreign exchange inflow, increase transparency, and create a unified exchange rate. The change was inspired by President Bola Tinubu's directive for a unified exchange rate to direct funds into meaningful investments.
Willing Buyer, Willing Seller Model: A key feature of the new regulations is the re-introduction of the "Willing Buyer, Willing Seller" model at the I&E Window. Under this model, entities with demand for foreign exchange can negotiate directly with sellers at an agreed price through authorized dealers, allowing for mutually agreed exchange rates.
Government Transactions and Weighted Average Rate: For all government-related transactions, the operational rate will be the weighted average rate of the previous day's executed transactions at the I&E window. This rate calculation aims to ensure fairness and transparency in government transactions involving foreign exchange.
Access to Forex for BTA/PTA, Medical, and School Fees: The CBN has assured that transactions such as Business Travel Allowance/Personal Travel Allowance (BTA/PTA), medical expenses, and school fees will continue to be processed through banks at the prevailing market rate, maintaining the existing application process and documentation requirements.
Order-Based Two-Way Quotes and Trading Hours: The new measures reintroduce order-based two-way quotes with a bid-ask spread of N1. All transactions will be cleared by a Central Counter Party (CCP), ensuring transparency of orders and seamless execution of trades. The operational hours for trades are set from 9 am to 4 pm, Nigeria time.
Proscription of Trading Limits and Cessation of Schemes: The CBN has set new rules regarding trading limits on oversold FX positions, allowing hedging of short positions with Over-The-Counter futures. The Bank also announced the cessation of the RT200 Rebate Scheme and the Naira4Dollar Remittance Scheme effective from 30 June 2023.
Unrestricted Access to Domiciliary Accounts: The CBN removed restrictions on domiciliary accounts, allowing account holders to transfer up to $10,000 per day in cash deposits. This measure complements other regulatory changes to facilitate smoother forex transactions.
Overall the 2023 updates to Nigeria's forex regulations by the CBN represent an attempt towards a more streamlined and transparent forex market. For individuals and businesses involved in international money transfers, understanding these new rules is essential for compliant and efficient transactions. For more board discussions on sending money to Nigeria, you can read our guide here.