Following the abolishment of segmentation in the foreign exchange market, the Central Bank of Nigeria (CBN) has discontinued the subsidization of forex through the RT200 programme and the Naira4Dollar remittance scheme.
The Naira4Dollar scheme was introduced by the CBN under the leadership of Godwin Emefiele to promote the processing of foreign exchange remittance through official channels by offering N5 for every remitted dollar into the country. Additionally, last year, the CBN implemented the RT200 FX programme with the aim of generating $200 billion in foreign exchange (FX) earnings from non-oil proceeds for Nigeria within the next three to five years.
A statement signed by Dr. Angela Sere-Ejembi, CBN’s Director of Financial Markets, announced that the RT200 Rebate Scheme and the Naira4Dollar Remittance Scheme would be discontinued from June 30, 2023.
The statement, issued Wednesday night, also outlined immediate changes to operations in the Nigerian Foreign Exchange Market.
Under the leadership of its Acting Governor, Folashodun Shonubi, the apex bank abolished segmentation in the forex market, merging all segments into the Investors and Exporters (I&E) window. Applications for medical expenses, school fees, BTA/PTA, and SMEs will continue to be processed through deposit money banks.
The new forex policy reintroduces the “Willing Buyer, Willing Seller” model at the I&E Window, with operations guided by the existing circular on the establishment of the window dated April 21, 2017, and referenced as FMD/DIR/CIR/GEN/08/007. All eligible transactions are permitted to access foreign exchange through this window.
The operational rate for all government-related transactions will be the weighted average rate of the previous day’s executed transactions at the I&E window, calculated to two decimal places. Trading limits on oversold FX positions are prohibited, with permission granted to hedge short positions using OTC futures. Limits on overbought positions will be set at zero.
The reintroduction of order-based two-way quotes is part of the new forex policy, with a bid-ask spread of A1. All transactions will be cleared by a Central Counter Party (CCP). The Order Book will also be reintroduced to ensure transparency of orders and seamless execution of trades.
