The Nation Newspaper

Tag: forex

  • CBN creates special forex window for investors, exporters

    CBN creates special forex window for investors, exporters

    The Central Bank of Nigeria (CBN) has established a special Foreign Exchange (forex) widow for investors and exporters.

    Its Director, Financial Markets, Dr. Alvan Ikoku, said the purpose of the window was to boost liquidity in the forex market and ensure timely execution and settlement of eligible transactions.

    He listed eligible transactions under the new window to include invisible transactions such as loan repayments, loan interest payments, dividends, income remittances, capital repatriation, management service fees and consultancy fees.

    Other transactions on the eligible list are software subscription fees, technology transfer Agreements, personal home remittances including ‘miscellaneous payments’ as detailed under Memorandum 15 of the CBN Foreign Exchange Manual.

    Ikoku said the invisible transactions under this window excluded international airlines ticket sales’ remittances.

    He said the window covered bills for collection and any other trade-related payment obligations, which are at the instance of the customer.

    The CBN director clarified that the permitted invisible transactions and bills for collection were eligible to purchase forex sourced from the CBN forex window limited to secondary market intervention sales (SMIS) wholesale, which is spot and forwards sales.

    “International airlines ticket sales’ remittances shall only be eligible to access the CBN FX window (SMIS-Retail and Wholesale) spot and forwards. The supply of foreign currency to the window shall be through portfolio investors, exporters, authorised dealers and other parties with foreign currency to exchange to Naira,” he explained.

    Ikoku explained that the CBN shall also be a market participant at the window to promote liquidity and professional market conduct.

    He added that ýparticipants at the new window would trade via telephone until appreciable progress is made with the FX trading systems on-boarding process, which is the FMDQ OTC Securities Exchange (FMDQ) Thomson Reuters FX Trading & Auction Systems.

    He, however, advised authorised dealers to promote market transparency by encouraging their corporate clients to ensure the activities of the window are operated on the forex trading systems.ý

    As part of the operational requirements of the window, the CBN director said the exchange rates of the transactions in the window shall be as agreed between authorised dealers and their counterparties.

    He also said that the CBN reserved the right to intervene as a buyer or seller, as it deems fit, in the window, adding that information on transactions between authorised dealers would be reported to the CBN on a daily basis.

  • Forex: CBN creates FX window for investors, exporters

    Forex: CBN creates FX window for investors, exporters

    Two weeks after opening a special Forex window for Small and Medium Enterprises (SMEs), the Central Bank of Nigeria (CBN) on Friday, established a Forex widow for investors and exporters.

    The ‎Bank’s Director in charge of Financial Markets, Dr Alvan Ikoku,in a circular, said the purpose of the window was to boost liquidity in the forex market and ensure timely execution and settlement of eligible transactions.

    Ikoku listed eligible transactions under the new window to include invisible transactions such as loan repayments, loan interest payments, Dividends, Income Remittances, Capital Repatriation, Management Service Fees and Consultancy fees.

    Also on the eligible list are Software subscription fees, Technology Transfer Agreements, Personal Home Remittances and other eligible transactions including ‘miscellaneous Payments’ as detailed under Memorandum 15 of the CBN Foreign Exchange Manual.

    Ikoku said the invisible transactions under this window excluded international airlines ticket sales’ remittances.

    He said that the window covered Bills for Collection and any other trade-related payment obligations, which are at the instance of the customer.

    Ikoku further clarified that the permitted invisible transactions and Bills for Collection were eligible to purchase foreign currency sourced from the CBN Forex window limited to Secondary Market Intervention Sales (SMIS) Wholesale, that is Spot and Forwards sales.

    “international airlines ticket sales’ remittances shall only be eligible to access the CBN FX window (SMIS-Retail and Wholesale)spot and forwards.

    “The supply of foreign currency to the window shall be through portfolio investors, exporters, authorised dealers and other parties with foreign currency to exchange to Naira.

    “The CBN shall also be a market participant at the window to promote liquidity and professional market conduct,” he said. ‎

    The CBN said participants at the new window would trade via telephone until appreciable progress is made with the FX trading systems on-boarding process, which is the FMDQ OTC Securities Exchange (FMDQ) Thomson Reuters FX Trading & Auction Systems.

    Ikoku advised authorised dealers to promote market transparency by encouraging their corporate clients to ensure the activities of the window are operated on the forex trading systems.‎

    As part of the operational requirements of the window, Ikoku said the exchange rates of the transactions in the window shall be as agreed between authorised dealers and their counterparties.

    He also said that the CBN reserved the right to intervene as a buyer or seller, as it deems fit, in the window, adding that information on transactions between authorised dealers would be reported to the CBN on a daily basis.

    It will be recalled that the CBN had injected over 380 million dollars into several segment of the foreign exchange market this week alone with hope of improving FX liquidity in the market and firm up the value of the Naira. (NAN)

  • CBN floats Forex window for investors, exporters

    CBN floats Forex window for investors, exporters

    Two weeks after opening a special Forex window for Small and Medium Enterprises (SMEs) to enable SMEs import eligible finished and semi-finished items, the Central Bank of Nigeria (CBN) on Friday, April 21, 2017, established a Forex widow for investors and exporters tagged: “Investors’ & Exporters’ FX Window”.

    A circular issued by the CBN on Friday disclosed that the purpose of the window was to boost liquidity in the forex market and ensure timely execution and settlement for eligible transactions.

    The circular signed by the Bank’s Director in charge of Financial Markets, Dr. Alvan Ikoku, listed eligible transactions under the new window to include invisible transactions such as loan repayments, loan interest payments, Dividends/Income Remittances, Capital Repatriation, Management Service Fees and Consultancy fees.

    Also on the eligible list are Software subscription fees, Technology Transfer Agreements, Personal Home Remittances and any such other eligible transactions including ‘miscellaneous Payments’ as detailed under Memorandum 15 of the CBN Foreign Exchange Manual.

    While explaining that the invisible transactions under this window excludes international airlines ticket sales’ remittances, the circular added that the window covered Bills of Collection and any other trade-related payment obligations, which are at the instance of the customer.

    The circular further clarified that the permitted invisible transactions and Bills for Collection were eligible to purchase foreign currency sourced from the CBN Forex window limited to Secondary Market Intervention Sales (SMIS) Wholesale (Spot and Forwards) only.

    According to the statement, international airlines ticket sales’ remittances shall only be eligible to access the CBN FX window (SMIS-Retail and Wholesale; spot and forwards.

    On participants in the new window, the circular disclosed that supply of foreign currency to the window shall be through portfolio investors, exporters, authorized dealers and other parties with foreign currency to exchange to Naira. The CBN, it added, shall also be a market participant at the window to promote liquidity and professional market conduct.

    Taking cognizance of the slow progress made by corporates in on-boarding the FMDQ OTC Securities Exchange (FMDQ) Thomson Reuters FX Trading & Auction Systems, the CBN said participants at the new window would trade via telephone until appreciable progress is made with the FX trading systems on-boarding process.

    The circular therefore advised authorized dealers to promote market transparency by encouraging their corporate clients to on-board to ensure the activities of the window are operated on the forex trading systems.

    To provide price discovery to the market, it said the FMDQ will be charged with polling buying and selling rates and other relevant information from the major participants in the market to provide participants with the requisite price discovery, and the CBN with the indicative market depth until the market migrates to the FX Trading systems.

  • CBN to sanction banks denying forex access to SMEs

    CBN to sanction banks denying forex access to SMEs

    The Central Bank (CBN) threatened on Friday to sanction banks denying Small and Medium Enterprises (SMEs) access to foreign exchange (Forex) from the newly instituted SMEs Forex Window.

    The window which opened about two weeks ago is designed to help SMEs import eligible finished and semi-finished items not exceeding $20,000 for an enterprise per quarter.

    Speaking on the sideline of the ongoing IMF/ World Bank Spring Meetings in Washington, CBN Acting Director, Corporate Communications, Isaac Okorafor, said appropriate sanctions are spelt out by the   CBN Act and the Banks and Other Financial Institutions Act (BOFIA).

    He said staff and even chief executives of banks could be punished where necessary.

    The CBN spokesman said the apex bank has already received series of complaints from bank customers, especially those that operate in the SMEs segment of the market that banks are frustrating their efforts at getting forex.

    Okorafor said some entrepreneurs still complain that banks are frustrating their efforts at obtaining forex for their eligible imports after the stipulated 48 hours.

    He said the regulator has reviewed the complaints and discovered they are not evidence-based.

    He appealed to bank customers and the SMEs to “please give us concrete evidence against these banks so that we can hold them responsible by way of sanctions.”

    He added: “Get a photocopy of your Form Q, Form X, Form A or Form M. Give us the name of the bank, branch and send to us and we will deal with them as example to others.

    “The only way we can make things better for Nigerians is for them to call the CBN whenever they are in trouble or whenever, or are getting frustrated by banks.

    “We have a number you can call or you send an email to our Consumer Protection Department. We want to urge everyone who is frustrated by banks to call and lay complaints. We assure you that you will get redress.”

  • Lagos seeks forex, interest rate convergence

    Lagos seeks forex, interest rate convergence

    Lagos State Governor, Mr. Akinwunmi Ambode yesterday called for convergence in foreign exchange (forex) rates and  interest rates’ reduction.

    He also pushed for a deliberate strategy to force down inflation rate to single digit as a means of stabilising the economy and putting ailing businesses back on track.

    Ambode, who spoke during the commissioning of an ultra-modern headquarters of Providus Bank in Lagos, said such measures would enable more investors to access funds and meet their obligations.

    Expressing optimism that the economy was gradually making steady move out of recession, Ambode said proactive steps must now be taken to sustain the successes recorded so far.

    Alluding to a recent report of World Economics revealing that the economy would soon move out of recession, he expressed delight at the fact that the consistent investment of the state government in critical sectors contributed to the resurgence of the economy.

    “While we are delighted that our efforts have contributed to this resurgence of the economy, there is still more to be done. The next steps are to achieve a convergence in the forex rates, force down inflation to a single digit and reduce interest rates. These will enable more business people to access funds and meet their obligations,” he said.

    He commended President Muhammadu Buhari over the Economic Recovery and Growth Plan (ERGP) recently released by the Federal Government.

    He said the economic blueprint would go a long way in charting the course for total economic recovery and growth desired by all.

    He also commended the Central Bank of Nigeria (CBN) for efforts at stabilising the exchange rates, and expressed optimism that the steps being adopted would help the ailing businesses to bounce back to profitability.

    Ambode said his administration has maintained a consistent programme of actively reflating the economy through massive expenditure in infrastructural development and engaging competent local contractors who in turn employ the people.

    He said between April last year and March  this year, a total of N16.9billion was released as payment of pension arrears to pensioners in the state, while N2billion was disbursed to young entrepreneurs and artisans under the N25 billion Employment Trust Fund (ETF) scheme.

  • Forex policy has killed 200 factories, claims MAN

    Forex policy has killed 200 factories, claims MAN

    The foreign exchange (Forex) of the Central Bank of Nigeria (CBN) banning importation of 41 items has forced more than 200 factories to close down in the last two years, the Manufactueres Association of Nigeria (MAN) has said.

    MAN’s Director-General Mr. Segun Ajayi-Kadir, called for a review of the policy to save the sector. He spoke when he led some members of the association to visit   Nigerian Shippers’ Council (NSC) Executive Secretary, Hassan Bello.

    “The restriction on the 41 items should be reviewed to remove the raw materials that are in it,” he said.

    Ajayi Kadir said 95 out of the more than 680 tariff lines in the 41 items were raw materials that are not locally available. “The way out is to take out those materials that are listed on the 41 items. It is not the right thing to do to deny any manufacturing industry the material it needs to produce,” he pointed out.

    Ajayi-Kadir argued that the inclusion of essential raw materials in the restriction basket does not make sense; that it was an error that was made and must be corrected. “The raw materials that are needed to produce must be brought in especially because they are not locally available.

    “To deny us access to those raw materials was ill advised and it should be changed. We are engaging government, the CBN and the Presidency. We have been having positive reactions, but something just needs to be done,” he insisted.

    The MAN boss further said there is the need for government to provide a conducive and friendly operating environment for manufacturers. Ne noted that a conducive environment is a prerequisite for a successful manufacturing company.

    Bello said the NSC would continue to promote the ease of doing business and a reduction in the cost of doing business in Nigeria.

    His words: “The essence of privatisation is to bring down the cost of doing business comparative to what we have in other climes.

    “We can only do that through negotiations and we have been doing that to see that prices are reasonable and competitive together with the service providers. Everything we do, we need to get their buy-in because our regulation is democratic and we will achieve the same aim that we set out to achieve.”

  • CBN: Banks breach forex borrowing limit

    CBN: Banks breach forex borrowing limit

    The Central Bank of Nigeria (CBN) yesterday said some commercial lenders have breached its regulatory limit of foreign currency borrowings due to the recent fall in the value of the naira.

    In a remedial action, the regulator increased the foreign currency borrowing limit for lenders to 125 per cent of their respective shareholders’ fund from 75 per cent previously, it said in a new circular quoted by Reuters.

    The apex bank also said that banks failed to take all $100 million foreign exchange (forex) allocations it offered.

    The demand for forex by authorized dealers seems to have slumped, as the dealers were only able to pick $45 million out of the $100 million offered by the apex bank on wholesale spot.

    Industry experts have attributed the slump in demand to the rate of forex liquidity being pumped into the system by the CBN, noting that it is only a matter of time before the dollar begins another round of crash. The experts also attributed the new trend to the general cash crunch in the financial system.

    The dollar has also crashed against major currencies since US President Donald Trump’s surprising declaration that China is not manipulating the value of the yuan.

    In a chat with newsmen, the Acting Director of Corporate Communications at the CBN, Isaac Okorafor, said the major injections made by the Bank in the course of the week were aimed at providing access to all stakeholders with legitimate need for forex.

    “The CBN remains upbeat that the forex market will remain liquid and that Nigerians who genuinely require the forex will get ample access to the currency,” Okorafor noted.

  • March inflation dips on forex supply, says NBS

    March inflation dips on forex supply, says NBS

    Annual inflation in Nigeria fell for a second straight month in March, showing the early effects of the Central Bank of Nigeria (CBN) intervention on the currency market to meet demand for dollars, the National Bureau of Statistics (NBS) said yesterday.

    Inflation declined to 17.26 per cent in March, NBS said in a report, down from 17.78 per cent in February, which was the first drop in 15 months.

    A Reuters’poll of economists had predicted a decline to 16.70 per cent.

    General price levels in rose for the 12th straight month in January to its highest level in more than 11 years, as the nation battled an economic recession, a currency crisis and dollar shortages, brought on by low oil prices, its economic mainstay.

    The NBS said the second consecutive month of a decline in the headline rate represented “the effects of stabilising prices in already high food and non-food prices”.

    “It is also indicative of early effects of a strengthened naira in the foreign exchange rate market,” it said.

    The CBN has sold over $4 billion on the forward currency market since February in an attempt to improve dollar liquidity and narrow the spread between the official and the black market exchange rates. Black market rates have fallen as a shortage of dollars caused the naira to plummet.

    A separate index showed food inflation at 18.44 per cent in March from 18.53 per cent in February, it said.

  • CBN releases $250m for forex forwards

    CBN releases $250m for forex forwards

    •Marks Global Money Week in schools 

    The Central Bank of Nigeria (CBN) yesterday released additional $250 million on 7 to 30 day forwards for agriculture, airline, petroleum products and raw materials.

    The bank also called for bids for wholesale spot for $100 million for Basic/Personal Travelling Allowance, medicals and tuition fees.

    Confirming this in Abuja, the CBN Acting Director, Corporate Communications, Isaac Okorafor, disclosed that the bank has also commenced heavy injections into the spot market in addition to the settlement of requests for wholesale spot bids for invisibles like school fees, medicals and personal travel allowance.

    The CBN had apex Bank had disbursed $20,000 each to the Bureau De Change (BDC) operators in two tranches of $10,000 each, which according to Okorafor underscores the commitment of the Bank to ensure liquidity in the foreign exchange market.

    The cbn has also, in commemoration of the 2017 Global Money Week and Financial Literacy Day in Nigeria, taken financial literacy campaign to the Methodist Girls High School, Yaba, Lagos.

    The Head, Consumer Education Division, CBN, Khadijah Kasim, who spoke at the school, said the campaign was focused on helping the students uderstand how to manage and save money.

    She said the Global Money Week is an event that is commemorated since 2012 and that the main purpose is to bring knowledge, awareness and entrepreneurial skills to children and youths.

    “The Central Bank of Nigeria, having found this initiative to be a laudable one, in its drive for financial inclusion, also came on board to start the celebration in 2013. One of our landmark events, among many other activities that we use to commemorate the week is the schools reach out and mentoring programme”.

    She said that this year’s exercise, themed: “Learn Save Earn” was informed by the need to encourage students to learn to save for rainy days and in order to know how to manage and make money  as they become  financially  included.

    According to Kasim, the CBN and other stakeholders have developed the financial education curriculum for the Basic and Senior Secondary system.

    “We are very happy to inform Nigerians that we have developed a financial education curriculum which we are hopeful will be launched in September 2017, and schools across the country are going to start teaching financial education.

    “The beauty of it is that it is infused into career subjects that are compulsory in the basic and secondary schools system.

  • Senate probes banks over N30tr foreign exchange manipulation

    Senate probes banks over N30tr foreign exchange manipulation

    The Senate Wednesday launched investigation into alleged foreign exchange allocation manipulation involving over N30 trillion.
    Many banks operating in the country were fingered in the deal said to have been perpetrated between 2006 and 2017.
    The banks were specifically queried over alleged manipulation and connivance with importers to defraud the country of huge sums of money.
    The investigation followed Senate mandate to its Committee on Customs and Excise to probe and identify revenue leakages and malpractices in the import and export chain.
    Chairman of the committee, Senator Hope Uzodinma who invited chief executives of banks handed them bulky documents detailing the amount of foreign exchange they received on behalf their importer customers.
    Uzondinma gave the banks three weeks to furnish the committee with details of the utilization of the foreign exchange they bought on behalf of their customers.
    He noted that preliminary investigation by the committee showed malpractices ranging from unutilised Form M, abandoned Form M, partially utilised Form M, abandoned assessments of Custom duties and foreign exchange allocation manipulation.
    Uzodinma said, “You recall Senate that in plenary mandated this committee to investigate and identify areas of revenue leakages in the entire import and export circle.
    “The committee started investigation and took time to enter into the import and export value chain and identified supposedly areas of leakages and malpractices, ranging from unutilised Form M, abandoned Form M, partially utilised Form M, abandoned assessments of Custom Duties and foreign exchange allocation manipulation.
    “We have been able to also go into the database of the operating system in the Nigerian Customs Service. We identified Form M by Form M, import by import, vessel by vessel, liabilities of importers and commercial banks that are yet to be handled.
    “We are talking about monies in the regions of over N30trillion. We have been able to give all this information to the various banks who purchased foreign exchange on behalf of the importers to go home and come back to show us evidence of utilisation of the forex.
    Failure of the banks to give evidence of utilization they will be compelled to refund the foreign exchange they bought from Central Bank of Nigeria or inter-bank, purposely to be used for import.
    “What we are saying in essence is that the amount of foreign exchange government is giving out to commercial banks and importers for the purposes of importation are not being utilised as agreed.
    “This is making foreign exchange scarce in the market. In essence making the foreign exchange that government is giving to importers not to be tied to activities of importation.
    “So, we don’t see this as a healthy development because in the process, some Asian companies are now round-tripping, sending monies that they don’t deserve out of this country without due process.
    “I’m sure that by the time we conclude this investigation and action plan that we set out to implement, I can tell you that the exchange rate will come down drastically because only genuine importers will now enjoy government forex allocation.”
    On the banks involved, Uzodinma said that no bank is exempted.
    He said, “All the banks are involved; the banks that are dead and the ones living. The ones that are no more operating were acquired by some banks. So, the activities of those that are no longer in operation we have been able to tie them to those that acquired them as part of the liabilities. Of course, we will expect that most of the banks that acquired these banks must have carried due diligence on them.”

    On why banks alone were fingered in the deal, Uzodinma said that the Foreign Exchange Utilisation Manual prepared by the Central Bank as a regulation guiding import and export entrusted commercial banks quantum of responsibilities.
    He explained that banks purchase money on behalf of the importers.
    “So, once you are acting on behalf of somebody the offence or the inaction of that person is your own inaction. We are now calling the banks because they are supposed to be the gateway for us to enter into the stream.
    “So, by the time the banks who must have carried out Know Your Customer programme, they know the addresses, the places of these importers and they are the people that opened Form M for them.
    “They are the people that purchased foreign exchange for them. The regulation requires them to monitor to ensure that these importers pay the correct custom duties on the importation. Also, there is what we call Bills for Collection.  It is the responsibility of the banks to know, ascertain and confirm that the documents sent as Bill for Collection that will warrant the release of the forex to the exporter are genuine. It is contained in the manual,” he said.
    Uzodinma said that Minister of Finance, CBN governor, Minister of National Planning and Comptroller General of Customs have been invited to appear at the next sitting of the committee on the issue.