The Central Bank of Nigeria (CBN) has introduced a new Foreign Exchange (FX) Code aimed at regulating the foreign exchange market and stabilizing the naira.
The guidelines, designed for eligible participants in Nigeria’s FX market, were announced on October 3, 2024, via the CBN’s official website.
According to the CBN, this FX Code aligns the country’s financial system with global standards and aims to promote transparency, fair practices, and resilience in Nigeria’s foreign exchange market.
The new FX Code is structured around six core principles: ethics, governance, execution, risk management and compliance, information sharing, and confirmation and settlement procedures.
These principles are intended to guide the behavior and actions of market participants, ensuring that all transactions in the FX market adhere to international best practices.
The guidelines are scheduled to take effect on October 14, 2024. Furthermore, all market participants, including banks and Bureau De Change (BDC) operators, are required to submit a self-assessment report by December 31, 2024, detailing their compliance with the FX Code.
In a statement, the CBN emphasized that the FX Code is designed to foster a “robust, fair, liquid, open, and appropriately transparent” market. It aims to ensure that all market participants can conduct transactions confidently and competitively, supported by a strong infrastructure.
Additionally, the CBN requires quarterly compliance reports to be submitted to the Financial Markets Department (FMD).
The first report is due by December 31, 2024, and subsequent reports must be submitted within 14 days after the end of each calendar quarter.
This announcement comes as the naira strengthens against the Dollar in both the official and parallel markets.
Following the CBN’s decision to float the naira on June 14, 2023, the currency initially weakened, dropping from ₦463 to ₦1,659.26 per Dollar by Thursday.
However, recent appreciation reflects efforts to stabilize the currency through such regulatory measures.
