CBN Introduces New Measures to Enhance Local Currency Liquidity for Diaspora Remittances

In a bid to ensure the smooth functioning of Nigeria’s Foreign Exchange Markets and bolster remittance flows through formal channels, the Central Bank of Nigeria (CBN) has announced new measures aimed at widening access to local currency liquidity for the settlement of diaspora remittances.

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CBN Introduces New Measures to Enhance Local Currency Liquidity for Diaspora Remittances

Under these measures, eligible International Money Transfer Operators (IMTOs) will be granted access to Nigerian Naira (NGN) liquidity at the CBN window. This initiative is designed to enhance the efficiency and accessibility of remittance services, ensuring that funds sent by Nigerians abroad reach their intended recipients more effectively.

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According to a circular issued by Dr. W. J. Kanya, Acting Director of the Trade & Exchange Department, eligible IMTOs can access the CBN window directly or through their Authorized Dealer Banks (ADBs) to execute transactions for the sale of foreign exchange in the market. The new guidelines for compliance include:

  1. Same-Day Settlement: Transactions executed before 12 noon on a trading date will be settled on the same day, providing quicker access to funds.
  2. Market-Reflective Pricing: The pricing on the CBN portal will mirror NAFEX traded rates, using an acceptable market benchmark to ensure fair and transparent exchange rates.
  3. Operational Framework: The operation of this market segment will follow the existing arrangement for authorized dealers with Foreign Portfolio Investment participating in primary market securities auctions.
  4. Mandatory Regulatory Returns: All participants are required to submit daily regulatory returns to the CBN detailing all relevant information on the sources of funds. This ensures comprehensive oversight and monitoring of the market.
  5. Participant Eligibility: The participants in this market segment include IMTOs, Authorized Dealer Banks, and the CBN itself.

These measures are effective immediately, reflecting CBN’s ongoing commitment to enhancing the financial landscape and supporting economic stability. By facilitating easier access to local currency for the settlement of remittances, the CBN aims to strengthen the formal remittance channels, contributing to the broader economic development goals.

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