Nigeria Introduces Measures to Enhance Naira Liquidity and Diaspora Remittances

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The Central Bank of Nigeria (CBN) has announced new measures aimed at bolstering naira liquidity and facilitating diaspora remittances, as detailed in a circular released on Monday.

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According to the circular, eligible International Money Transfer Operators (IMTOs) will now have direct access to naira liquidity through the CBN’s designated window. This initiative is intended to streamline the process of remittance settlements, ensuring greater efficiency and accessibility to local currency liquidity, the CBN noted.

Under the updated guidelines, IMTO operators can access the CBN window directly or through their Authorised Dealer Banks (ADBs) for foreign exchange transactions. Specific compliance measures have been outlined to ensure the smooth implementation of these new provisions.

W. J. Kanya, Acting Director of the CBN’s Trade and Exchange Department, signed the circular, specifying that transactions conducted before noon on any trading day will be settled on the same day. Additionally, pricing on the CBN portal will align with the NAFEX traded rates, serving as a reliable market benchmark.

The operational framework of this segment will adhere to existing arrangements applicable to authorized dealers engaged in foreign portfolio investment in primary market securities auctions.

Participants in this framework include IMTOs, authorised dealer banks, and the CBN, all of whom are mandated to submit daily regulatory returns containing comprehensive information on fund sources.

Effective immediately, these measures underscore the CBN’s commitment to ensuring the seamless functioning of the foreign exchange market and enhancing formal remittance channels.

In a related effort earlier in May 2024, the CBN granted an approval-in-principle (AIP) to 14 IMTOs, aiming to double foreign-currency remittance inflows through formal channels. This initiative seeks to stimulate sustained foreign exchange supply in the official market, fostering increased competition and innovation among IMTOs to reduce remittance transaction costs and promote financial inclusion.

Hakama Sidi Ali, CBN’s Acting Director of Corporate Communications, highlighted the potential impact: “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.”

CBN Governor Olayemi Cardoso recently articulated the apex bank’s target to double remittance flows into Nigeria within a year, expressing confidence in achieving this goal. “We are swiftly addressing barriers hindering flows through formal channels. Our strategic approach involves close collaboration with key stakeholders in the remittance industry,” he affirmed.

David Okafor
David Okaforhttp://naija247news.com
David Okafor Foreign Affairs Editor, Naija247news Media Group David Okafor is the Foreign Affairs Editor at Naija247news Media Group, with over five years of experience in international journalism. He excels in delivering insightful and impactful coverage of global politics and economic trends. Holding a degree in International Relations, David is known for his investigative skills and editorial leadership. His work ensures Naija247news provides accurate and comprehensive analysis of world events, earning him respect in the media industry.

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