Adedapo Adesanya
By Adedapo Adesanya
The Central Bank of Nigeria (CBN) has issued a new circular that removes the previous cap on exchange rates quoted by International Money Transfer Operators (IMTOs) like Western Union, MoneyGram, and others.
The ease in rules on international money transfers is one of the latest steps the apex bank has taken to free up the volatile foreign exchange (FX) market.
On paper, this will make it easier to attract billions in remittances being sent home by citizens living abroad. Due to the exchange rate limits, people abroad using IMTOs to send money to Nigeria couldn’t sell them at market rates.
This is coming after a circular was issued earlier by the CBN to address suspected cases of excessive foreign currency speculation and hoarding from Nigerian banks.
IMTOs were previously required to quote rates within a permissible range of -2.5 per cent to +2.5 per cent around the previous day’s closing rate of the Nigerian Foreign Exchange Market, as said last year.
In the circular titled Removal of Allowable Limit of Exchange Rate Quoted by the International Money Transfer Operators dated September 13, 2023, the lender sought to make a shift towards a more liberalised foreign exchange regime in Nigeria.
“The circular with reference TED/FEM/PUB/FPC/001/009 dated September 13, 2023 states that International Money Transfer Operators are required to quote rates within an allowable limit of -2.5% to +2.5% around the previous day’s closing rate of the Nigerian Foreign Exchange Market.
“However, in line with the CBN’s commitment to liberalise the Nigerian Foreign Exchange Market, IMTOs are hereby allowed to quote exchange rates for naira payout to beneficiaries based on the prevailing market rates at the Nigerian Foreign Exchange Market on a willing seller, willing buyer basis.”
Now, IMTOs are allowed to quote exchange rates for naira payouts to beneficiaries based on the prevailing market rates at the Nigerian FX market.
The Nigerian FX market has been under intense pressure this month with rates across several windows trading at their lowest levels yet.
