FOREX policy: CBN appoints 16 banks as primary dealers

CBN under Emefiele moved over N400billion to former NSA, Monguno’s office in two years

With the new flexible foreign exchange policy barely a week old, the Central Bank of Nigeria (CBN) has approved 16 commercial banks to participate in the market as primary dealers.

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The number of dealers is six more than the initial 10 the CBN governor, Godwin Emefiele, said would be appointed to play in the new market which took off on Monday.

Authoritative sources close to the bank said on Thursday in Abuja that at least 16 of country’s top banks met the criteria for selection as primary dealers in the market.

At the unveiling of the new FX policy last week, Mr. Emefiele had said that only 10 banks with financial capacity to handle a minimum volume of $10 million deal, would be appointed to work with the CBN as primary dealers when the market formally opens.

The primary dealers, the CBN governor explained, would operate with other dealers in the Inter-bank market in line with stipulated foreign exchange primary dealers (FXPD) guidelines, while CBN’s participation would be limited to periodic interventions to either buy or sell FX as the need arises.

But, the source at the CBN, who asked that his name should not be mentioned, as he was not authorised to speak on the issue, said that prior to the formal opening of the new FX market on Monday, all banks were given the opportunity to show capacity to participate in the market.

According to the source, apart from three merchant banks that were unable to respond, all interested banks submitted applications after reviewing the stipulated guidelines for prospective dealers, at the end of which 16 of them were considered qualified as primary dealers.

He however refused to name the 16 selected banks, saying in view of the CBN’s determination not to be seen as influencing the independence of the market, it was advisable that only the affected banks would be allowed to make such disclosures.

At the opening of the market on Monday, the CBN had injected $4 billion to clear the back-log of FX demand by customers at the inter-bank market, a development the Special Adviser to the CBN governor on Financial Markets, Emmanuel Ukeje, expressed confidence was gong according to plan.

“As at today, all back-log of foreign exchange demand by customers at the inter-bank market has been cleared by the CBN,” Mr. Ukeje said. “Trading has been going on, although not as much as it should be, because everybody is cautiously watching the direction things are going.

“But, the CBN is confident everything is going according to plan. CBN will continue to intervene regularly as the need arises. FX market is not static. There are continuous movements, as investors come into the market.

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