The Federal Government, on Friday, consummated the Bilateral Currency Swap Agreement, BCSA, signed with the People’s Bank of China on April 27, 2018, as the Central Bank of Nigeria, CBN, announced that it has commenced a bi-weekly sale of the Chinese Yuan.
This was the core of a statement issued by the apex bank’s Director of Information, Mr. Isaac Okoroafor, who also disclosed that the sales would be done through “a combination of spot and short tenured forwards”.
Okorafor, who also disclosed that CBN would receive bids from all authorised dealers, further explained that the exercise would take the form of a Special Secondary Market Intervention Sales retail and would be dedicated to the payment of Renminbi denominated Letters of Credit for raw materials and machinery and agriculture.
And as a result of the peculiar nature of the exercise, the CBN spokesman said that the apex bank would not apply the extant provisions of its Revised Guidelines for the operation of the Inter-bank Foreign Exchange Market, which direct all SMIS bids to be submitted to the bank through the Forex Primary Dealers, FXPDs.
“The CBN would also not be applying the relevant provisions of the Guidelines which equally provide that Spot foreign exchange sold to any particular end-user shall not exceed one per cent of the overall available funds on offer at each SMIS session,” the statement expatiated.
On funding, Okoroafor, in the statement, revealed that authorized dealers would be required to debit the customers’ accounts for the naira equivalent of their bids, and the CBN would, in turn, debit authorized dealers’ current account on the day of intervention to the tune of the naira equivalent of their bid request.
Okorafor further revealed that there would be no predetermined spread on the sale of Forex Forwards by Authorised Dealers to end-users under the Special SMIS-Retail. The Authorised Dealers would be allowed to earn 50 kobo on the customers’ bids.
