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Forex Business News

Global Board of Trade (GBOT) to Launch Derivatives (Commodity and Currency Futures) Exchange in Mauritius

Jan 7

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Global Board of Trade (GBOT)A commodities and currency exchange expected to go live in Mauritius in late March plans to offer Africa’s first currency futures and derivatives market for the Kenyan shilling and Ugandan shilling. This news comes after reports in this past November that Bourse Africa plans to set up an African commodities exchange.

Joseph Bosco, Chief Operating Officer of Global Board of Trade (GBOT) that will run the exchange, told Reuters it would allow market players to better hedge themselves in a region where political risk weighs heavily on the markets.

“We intended to start off with six currency pairs and now we are expanding to eight pairs with the dollar as the base. The two additions are the Kenyan and Ugandan shillings,” Bosco said in a telephone interview on Wednesday. Read the rest of this entry »

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Central Bank of Nigeria (CBN) Bars Foreign Exchange (Forex) Transfers among Retail Banks

Aug 6

Posted by Staff Writer in News | 2 Comments

Central Bank of NigeriaThe Central Bank of Nigeria (CBN) has barred retail banks from trading foreign exchange purchased at the official market among themselves in a step to stem the rapid decline of the naira.

The CBN said, in a circular dated August 3, that trading in forex obtained at its auctions by lenders was responsible for the wide gap in the official exchange rate and the interbank rate of the naira.

“Funds procured from the Wholesale Dutch Auction System (WDAS) shall not be transferable at the interbank window,” the Central Bank of Nigeria (CBN) said in a circular to lenders in Nigeria, sub-Saharan Africa’s second biggest economy.

The Central Bank of Nigeria first imposed restrictions on forex trading between banks in February to conserve Nigeria’s falling foreign reserves and stem a sharp decline in the currency.

The naira has weakened consistently against the U.S. dollar at the CBN’s window since curbs on interbank trading were removed and the WDAS re-introduced in July, due to low dollar supply against mounting demand. Read the rest of this entry »

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Central Bank of Nigeria (CBN) Pegs Banks’ Forex Demand

Jul 30

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Foreign ExchangeThe Central Bank of Nigeria (CBN) has issued guidelines restricting foreign exchange demand at the Wholesale Dutch Auction System (WDAS) auctions.

In a circular to “All Authorised Dealers” signed by Alhaji Batari Musa, Director, Trade and Exchange Department, Central Bank of Nigeria, and entitled “Re: Revised Guidelines for the Operation of the Foreign Exchange Market: Wholesale Dutch Auction System”, the CBN limited foreign exchange demand by banks to one tranche of bids per day.

Previously banks could submit three tranches of bids per day. The circular stated, “This is to inform all Authorised Dealers that paragraph 3 (b) of the circular Ref: TED/FEM/FPC/GEN/01/110 of July 8, 2009 on the above subject has been amended as follows: “Authorised Dealers shall submit bids for only one (1) tranche per auction, while the Central Bank of Nigeria reserves the right to reject any bid that is deemed to be unrealistic. This amendment takes immediate effect.”

A source within the CBN, who spoke on condition of anonymity, said that the circular is a subtle measure by the CBN to control daily foreign exchange demand by banks. He said that previously banks could receive foreign exchange bids from customers and submit them in three tranches before the close of bidding on each foreign exchange auction day.

Consequently, banks could collate foreign exchange bids every two or three hours and submit to the CBN. However, with the new measure, it means that banks can only submit one tranche of bids and hence they would not be able to wait to receive bids every two or three hours from customers. The implication is that customers whose bids do not make the one tranche would wait till the next business day to have their bids submitted by their banks. Read the rest of this entry »

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Central Bank of Nigeria (CBN) Rolls Out Guidelines for Foreign Exchange (Forex) Operations

Jul 10

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Central Bank of NigeriaThe Central Bank of Nigeria (CBN) has rolled out its revised guidelines for foreign exchange (Forex) market operations in line with the recently announced liberalised regime.

In a circular to authorised dealers and the general public, signed by the Acting Director, Trade and Exchange Department, CBN, Mr. Batari Musa, and posted on the website on Wednesday, the apex bank said the Wholesale Dutch Auction System (WDAS) would, with effect from Monday, July 13, replace the Retail Dutch Auction System (RDAS). This, the CBN circular said, is to stimulate activities in the inter-bank market and stabilise the foreign exchange market.

Former CBN Governor, Professor Chukwuma Soludo, replaced the WDAS with RDAS as an interim measure to tackle excessive demand for foreign exchange for non-approved transactions, as the naira faced pressure in the face of dwindling oil revenues. In the latest circular, referenced “TED/FEM/FPC/GEN/01/110″, the CBN said that it “shall intervene in the foreign exchange market through the WDAS” and would announce on Monday and Wednesday the amount on offer for each auction at 8:30 am. The CBN said copies of the announcement might be obtained from its trade and exchange department at the CBN Head Office in Abuja.

According to the circular, “Under this system, authorised dealers shall submit their bids on Monday and Wednesday, as per the attached format, duly signed by two authorised signatories for any particular auction session between 9:00 am and 10:30 am on the day of the auction; and submit bids for no more than three tranches per auction, while the Central Bank of Nigeria reserves the right to reject bids that are deemed to be unrealistic.” The CBN said the bids should be submitted via Reuters Dealing 3000 Xtra System to the Abuja dealing line. Read the rest of this entry »

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Nigeria Lifts Restrictions on Foreign Exchange (Forex) Market

Jul 7

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Foreign ExchangeNigeria’s Central Bank Governor (CBN), Lamido Sanusi, said the CBN would immediately liberalize its foreign exchange (Forex) market, lifting restrictions imposed earlier this year. This relaxation of restrictions on foreign exchange trading comes after the recent stabilization of the local currency, the Nigerian naira, and recovery in oil prices, which have boosted Nigeria’s foreign currency reserves.

“All other restrictions imposed recently are removed,” Lamido Sanusi said today at a briefing in the capital, Abuja. The move frees the country’s banks to resume dealing in foreign currencies among themselves and on behalf of their customers, as was the practice before the restrictions were imposed.

Nigeria banned interbank foreign currency trading on February 9. The lenders were ordered to sell foreign currencies only to the CBN in a bid to stem the depreciation of the naira. The naira was not allowed to rise or fall by more than 3% against a target exchange rate.

The naira had fallen about 20% between November 26 and early February, as the government let it weaken rather than run down foreign reserves. Nigeria’s reserves stood at $43.2 billion on July 3, according to data on the CBN’s website, compared with about $62 billion in October last year.

Crude oil, which accounts for 90% of Nigeria’s export earnings, sold for $64.89 a barrel today, up from as low as $32.40 in December, boosting Nigeria’s ability to defend the naira. Read the rest of this entry »

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