- The CBN has granted International Money Transfer Operators (IMTOs) the flexibility to quote the naira exchange rate against the dollar based on the prevailing market rates.
- The IMTOs were formerly 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.
- The move aims to encourage International Money Transfer Operators (IMTOs) to bring their foreign exchange (forex) supply into Nigeria.
The Central Bank of Nigeria (CBN) has eased rules on international money transfers, taking another step in freeing up its volatile foreign-exchange market to attract billions of dollars being sent home by citizens living abroad.
Nigeria's central bank abolishes FX caps to attract billions from diaspora
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The apex bank has granted International Money Transfer Operators (IMTOs) the flexibility to quote the naira exchange rate against the dollar based on the prevailing market rates.
This approach follows the principle of a "willing seller, willing buyer" basis; hence, exchange rates will be determined by the market forces of supply and demand.
This move was announced through a circular titled "Removal of Allowable Limit of Exchange Rate Quoted by the International Money Transfer Operators."
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What the circular says:
“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 liberalize 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.”
The apex bank noted that authorised Dealers, International Money Transfer Operators, and the general public are hereby informed to note and comply accordingly.
Nairametrics reported that the recent changes aim to encourage International Money Transfer Operators (IMTOs) to bring their foreign exchange (forex) supply into Nigeria, rather than keeping it abroad.
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Previously, due to exchange rate limits, diaspora Nigerians using IMTOs to send money home couldn’t sell forex at market rates, leading to reduced forex liquidity in Nigeria.
In another recent effort to stabilize Nigeria's volatile exchange rate, the Central Bank of Nigeria issued an order instructing banks to divest their excess dollar reserves by February 1, 2024.
