By Modupe Gbadeyanka
A Special Secondary Market Intervention Retail Sales (SMIS) has been approved by the Central Bank of Nigeria (CBN) for airlines operating in the country.
This move, it was explained, to intervene in the Inter-Bank Forex market through forward settlement and also to engender market confidence, ensure access to Forex by the airlines to settle their obligations and sustain the integrity of the Nigerian Inter-Bank Foreign Exchange market.
Also, other critical sectors to benefit from the one-off exercise dedicated to the clearance of the backlog of matured Foreign Exchange obligations are raw materials and machineries for manufacturing companies and agricultural chemicals.
The import of this peculiar exercise is that the CBN will not apply the relevant provisions under clause 2.4.3 (i) of its Revised Guidelines for the Operation of the Nigerian Inter-Bank Foreign Exchange Market which provides that “all SMIS bids shall be submitted to the CBN through the FXPDs”.
As a result of this, CBN shall receive bids from all the Authorized Dealers.
The CBN will also not apply the relevant provisions under clause 2.4.3 (i) of the Guidelines which provide that “Spot Forex sold to any particular end-user shall not exceed 1% of the overall available funds on offer at each SMIS session.”
According to the CBN, “Whereas the bids are on Spot Forex basis as the Authorized Dealers’ accounts with the CBN will be debited in full for the Naira equivalent of the USD bid amount, the CBN will settle the bids through forward settlements of 2 months. Customers that are not willing to accept the settlement terms have been advised not to participate in this Special SMIS – Retail.”