Forex Update

This is an update on the foreign exchange market in Nigeria.

Further to the decision at the last Monetary Policy Committee and the Central Bank of Nigeria’s (“CBN”) meeting to introduce a single foreign exchange market in Nigeria, the Governor of the CBN today released highlights of the flexible foreign exchange (“FX”) market. The CBN also issued the Revised Guidelines for the Operation of the Nigerian inter-Bank Foreign Exchange Market 2016 and Guidelines for Primary Dealership in Foreign Exchange Products 2016.

The changes which we have itemised below have not affected the requirements that apply to a foreign investor making investment in Nigeria. Such investors are still required to obtain a Certificate of Capital Importation (“CCI”) for their investments subject to providing appropriate documentation and this forms the basis on which they will be entitled to repatriate proceeds from their investment out of Nigeria. The main change for foreign investors, which is a positive one, is that they are now able to convert their capital into Naira at a market determined exchange rate. The applicable rate is no longer tied to a CBN determined rate. The requirements and documentation for the issuance of CCIs remain the same and all existing CCIs remain valid.

Some of the highlights of the policy and guidelines include:

1. The FX market shall operate as a single market structure via the interbank market and through authorised dealers – i.e., banks licensed by the CBN to deal in FX. Participants in the inter-bank FX market shall include authorised dealers, authorised buyers, oil companies, oil service companies, exporters, end-users and any other entity that the CBN may designate from time to time.

2. FX exchange rate will be purely market driven via FMDQ Thomson Reuters platform.

3. The CBN will participate in the interbank FX market through periodic interventions to either buy or sell FX spot upon the receipt of valid two-way quotes on the standard amount.

4. The CBN will introduce and register FX primary dealers who that will deal with the CBN on a two way quote basis for large deal sizes. FX primary dealers will deal with other authorised dealers and other players in the interbank market.

5. There shall be no pre-determined spreads on FX transactions and all FX purchases are transferable. The maximum spread between the bid and offer rates in the inter-bank market shall be determined by FMDQ OTC Securities
Exchange (FMDQ).

6. The 41 items that have been classified as not valid for FX are still not admissible in the interbank FX market.

7. OTC FX futures have been introduced. OTC FX Futures sold by Authorised Dealers to end-users must be backed by trade transactions (visible and invisible) or evidenced investments. Settlement amounts on OTC FX Futures may be repatriated for Foreign Portfolio Investors (FPIs) with CCI.

8. Proceeds of FX brought into Nigeria (such as foreign investment inflows and international money transfers) shall be purchased by authorised dealers at the daily interbank rates.

9. Non-oil exporters are now allowed unfettered access to export proceeds through the interbank FX market.

10. FX in the inter-bank market is not permitted to be sold to Bureaux-de-Change.

Events are still unfolding and we will watch developments as they unfold in the coming days including any additional regulations that the CBN may release in the future.

This does not constitute legal advice and should you have any questions regarding these developments please send an email to or to your usual UUBO contact.