The Central Bank of Nigeria (CBN) yesterday flagged off its intervention in the sale of foreign exchange in Chinese Yuan (CNY), signalling the consummation of the Bilateral Currency Swap Agreement (BCSA) it signed with the People’s Bank of China (PBoC) on April 27. A statement issued by the apex bank yesterday disclosed that the sales will be through a combination of spot and short tenored forwards.
It added that the exercise, which shall be Special Secondary Market Intervention Sales (SMIS) retail, would be dedicated to the payment of Renminbi (Yuan) denominated Letters of Credit (L/C) for raw materials and machinery and agriculture.
The Acting Director, Corporate Communications Department at the CBN, Isaac Okorafor, explained that the regulator would receive bids from all authorised dealers. He added that due to the peculiarity of the exercise, the CBN would not be applying the relevant provisions of its Revised Guidelines for the Operation of the Inter-bank Foreign Exchange Market, which directs all SMIS bids to be submitted to the CBN through the Forex Primary Dealers (FXPDs). According to Okorafor, the CBN would also not be applying the relevant provisions of the Guidelines, which equally provide that “Spot FX sold to any particular end-user shall not exceed one per cent of the overall available funds on offer at each SMIS session”.
Speaking on the bid period, he said authorised dealers were requested to submit their customers’ bids from 9am to 12pm on July 20, adding that bids received after this time would be disqualified.