Nigeria unveils new market determined rates for Naira currency

Nigeria on Wednesday unveiled new guidelines in the management of foreign exchange (FX) which will be determined by the market and primary dealers.

The re-introduction of a flexible inter-bank exchange rate market would restore the automatic adjustment mechanism of the exchange rate, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) told a news conference in Abuja, the nation's capital.

He said the workings of the market would then be consistent with the Bank's objectives of enhancing efficiency and facilitating a liquid and transparent Foreign Exchange Market.

Emefiele said the new policy became necessary to deal with the effect of the drop in international oil prices and global growth slowdown which had impacted negatively on the country's economy.

The apex bank chief said the primary dealers would be chosen from existing FX dealers based on the volume of foreign exchange transactions they have handled before and must have a minimum capital of 10 million U.S. dollars.

He said the level of liquidity, the extent to which those dealers have complied with CBN's regulations in the past, their level of preparedness in terms of being able to provide all the soft and hardware needed to operate would also be conditions to determine their qualification.

He said the Inter-bank trading under the new guidelines would begin on June 20 while the tenors and rates for the Over The Counter Naira-settled FX Futures would be announced on June 27. Endit