Q. What CBN FX intervention windows are available to importers?
A. The CBN Retail Secondary Market Intervention Sales (this takes place fortnightly) and the CBN Special Sales to Local Corporates (At CBN’s discretion)
Q. What are the currencies supplied by the CBN in the Retail Secondary Market intervention Sales?
A. At the moment there are just two currencies namely the USD (United States Dollars) and CNY (Chinese Yuan).
Q. Can customers with forms M denominated in other currencies apply for Retail intervention?
A. Yes; Bank will submit request for USD equivalent based on indicative cross rate at bid date and subsequently convert to form M currency at prevailing cross rate upon successful bid and delivery of allocated amount.
Q. Who can participate in the Retail FX Market?
A. Only importers with qualifying transactions including new and existing Letters of Credit and matured Bills for Collections for the following import category:
- Raw Materials
- Machinery / Industrial Equipment
- Petroleum Products
- Agro-Allied Product
Q. What other things must be in place for customers to access the CBN Retail auction?
A. Customers’ accounts must be fully funded a day before the auction date to the tune of the Naira equivalent of the FX bid amount.
Q. Will customers’ accounts be debited before the auction and at what rate?
A. Yes, customers’ accounts will be debited on the auction date and at the rate quoted on customers’ bid instruction plus the bank’s 50kobo margin.
Q. Why are customers debited before the bid result is released?
A. CBN also debits banks before bid result is released and Bids on unfunded accounts are automatically disqualified by the CBN
Q. How frequent does the CBN announces Retail FX intervention?
A. CBN announces Retail SMIS intervention on a fortnight basis
Q. How long does it take to get result of the auction?
A. Results are usually released one week after the auction date.
Q. Can a customer present bid requests for several transactions during a bid session?
A. Yes, each transaction is unique and can be presented on its own merit provided it is a qualifying transaction.
Q. Why are customers debited with naira equivalent of full bid amounts when final allocations are usually less than bid amounts?
A. The practice of debiting customers with Naira equivalent of the bid amounts is consistent with CBN guidelines for the Retail SMIS and the CBN similarly debits banks for the full value of the total bid amount presented
Q. What happens to the naira value for the unallocated funds?
A. Once the result of the auction is out, the bank reverses the initial naira debit for bid amount and debits for the actual amount allocated as per CBN advice.
Q. Can a customer represent bid for shortfall in allocation from the retail window where the CBN does not give full allocation at the first presentation?
A. Yes, customer can represent bid for unallocated balance at subsequent bid sessions.
Q. Can Importers source funds from several windows to fund a Letter of Credit transaction?
A. Customers can source funds from several windows including own ordinary domiciliary account and own export domiciliary account to fund eligible trade transaction. However, care must be taken to ensure allocated amount does not exceed transaction value to forestall loss that may arise from repurchase of excess allocation.
Q. What determines the tenor of FX allocation to a customer in the CBN retail intervention market?
A. Customer’s FX bid rate in addition to the standard market forces of demand and supply. The rate quoted by customers at every retail auction determines whether customers will get SPOT FX allocation or FORWARD FX allocation with future delivery dates ranging from 15 to 180 days tenor
Q. What happens if a customer is no longer interested in taking up forward FX allocated to them from the CBN retail window; will the bank do an immediate Naira refund?
A. Refund is not immediate. The Bank will need to wait for the forward FX to be delivered by the CBN at maturity and then return the same to the CBN for repurchase. Customer will only be credited upon receipt of the Naira equivalent of the repurchased amount from the CBN. The CBN will always repurchase funds at a rate lower than the original bid amount.
Q. Is there an option for customer to get their forward allocation from the CBN converted to SPOT?
A. The Bank has a product that enables customer to convert Forward FX allocation to spot but this is currently handled on case-by-case basis and must be discussed with the Bank’s Trade Finance Team.
Q. What are the other FX intervention available to importers and the requirements?
A. The Investors and Exporters window (I&E) is also available for importers to access foreign exchange for New and Existing Letters of Credits and matured Bills for Collections with complete documentation regardless of the items of import.
Q. What are the currencies available in the I&E window?
A. The I&E window is available in USD/GBP/EUR/ZAR.
Q. How long does it take to get FX under I&E window?
A. Allocations at the I&E window are usually spot subject to availability.