CBN BEGINS SALES OF CHINESE YUAN IN CURRENCY SWAP DEAL

CBN begins sale of Chinese Yuan in Currency swap deal – The Central Bank of Nigeria on Friday, commenced its intervention in the sale of foreign exchange in Chinese Yuan.
The implementation signalled the consummation of the Bilateral Currency Swap Agreement signed with the People’s Bank of China on April 27, 2018.
The apex bank in a statement issued on Friday explained that the sale of foreign exchange under the agreement would be done through a combination of spot and short tenored forwards.

It added that the exercise, is in form of a Special Secondary Market Intervention Sales retail and would be dedicated to the payment of Renminbi denominated Letters of Credit for raw materials and machinery and agriculture.
The CBN Spokesman, Mr Isaac Okorafor, explained in the statement that the apex bank would receive bids from all authorized dealers.

He added that due to the peculiarity of the exercise, the apex bank would not be applying the relevant provisions of its Revised Guidelines for the operation of the Inter-bank Foreign Exchange Market, which direct all SMIS bids to be submitted to the CBN through the Forex Primary Dealers. The statement reads in part, “The CBN would also not be applying the relevant provisions of the Guidelines which equally provide that Spot foreign exchange 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 would be requested to submit their customers’ bids from 9.00 am to 12.00 pm on Friday July 20, 2018, adding that bids received after this time would be disqualified. On funding, he disclosed that authorized dealers would be required to debit the customers’ accounts for the naira equivalent of their bids, stressing that the CBN would debit authorized dealers’ current account on the day of intervention to the tune of the naira equivalent of their bid request.

Okorafor further explained in the statement that there would be no predetermined spread on the sale of Forex Forwards by Authorised Dealers to end-users under the Special SMIS-Retail.
He added that Authorised Dealers would be allowed to earn 50 kobo on the customers’ bids.