{"id":8605,"date":"2026-06-03T13:08:15","date_gmt":"2026-06-03T13:08:15","guid":{"rendered":"https:\/\/ograsset.com\/?p=8605"},"modified":"2026-06-03T13:08:16","modified_gmt":"2026-06-03T13:08:16","slug":"cbn-bets-on-rules-to-stabilise-fx-market","status":"publish","type":"post","link":"https:\/\/ograsset.com\/index.php\/2026\/06\/03\/cbn-bets-on-rules-to-stabilise-fx-market\/","title":{"rendered":"CBN bets on rules to stabilise FX market"},"content":{"rendered":"\n
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CBN bets on rules to stabilise FX market<\/strong><\/h1>\n\n\n\n

For years, Nigeria\u2019s foreign exchange market has been shaped as much by uncertainty as by supply and demand. Importers complained about delays and documentation bottlenecks. Exporters often questioned whether existing procedures encouraged them to repatriate earnings through official channels. Investors worried about policy reversals and access to foreign exchange. The banks found themselves navigating changing regulations, multiple directives, and periods of market stress.<\/p>\n\n\n\n

Against that backdrop, the launch of the fourth edition of the CBN\u2019s Foreign Exchange Manual represents more than a regulatory update. It is the latest stage in a broader effort by monetary authorities to build a foreign exchange market governed less by discretion and more by clear rules, transparency and accountability.<\/p>\n\n\n\n

The revised manual, which became effective on 1 June, comes after nearly eight years since the previous edition was issued in 2018. During that period, Nigeria\u2019s economy experienced a global pandemic, oil price volatility, foreign exchange shortages, exchange rate reforms and a shift towards a more market-driven currency regime. Those developments exposed weaknesses in the existing framework and increased calls for clearer operating standards.<\/p>\n\n\n\n

Speaking at the launch, CBN Governor, Mr Olayemi Cardoso, argued that the changes were necessary to align foreign exchange administration with present realities.<\/p>\n\n\n\n

\u201cForeign exchange is more than a financial instrument; it is a critical enabler in any open economy. It anchors price stability, facilitates the flow of goods and capital, and shapes investor sentiment,\u201d Cardoso said.<\/p>\n\n\n\n

He noted that both global and domestic economic conditions had changed considerably over the past decade, requiring regulators to update the framework guiding market operations.<\/p>\n\n\n\n

\u201cOngoing foreign exchange market reforms have made it necessary to revise the Manual to provide a more coherent and forward-looking regulatory framework. The last edition was issued in 2018, making this review both timely and necessary,\u201d he added.<\/p>\n\n\n\n

Yet beyond the ceremonial launch, the revised manual raises a broader question. Can clearer rules and stronger compliance requirements help deliver the stable, transparent and liquid foreign exchange markets that policymakers have promised for years?<\/p>\n\n\n\n

Rules driving confidence<\/strong><\/p>\n\n\n\n

The CBN\u2019s current reform programme has largely focused on restoring confidence in the foreign exchange market. Since assuming office, Cardoso has repeatedly argued that transparency, market discipline and credible price discovery are prerequisites for attracting investments and improving liquidity.<\/p>\n\n\n\n

The revised manual appears designed to provide the operational framework for those objectives.<\/p>\n\n\n\n

According to the Deputy Governor, Economic Policy Directorate, Dr Muhammad Abdullahi, the review formed part of a wider strategy initiated at the beginning of the current administration of the apex bank.<\/p>\n\n\n\n

\u201cIt is important to note that the reform and comprehensive review of Nigeria\u2019s Foreign Exchange Manual was initiated by the CBN Governor, Mr Olayemi Cardoso, from the very beginning of his administration as part of a broader agenda to restore confidence, improve transparency, deepen liquidity, and strengthen the overall functioning of Nigeria\u2019s foreign exchange market,\u201d Abdullahi said.<\/p>\n\n\n\n

His remarks suggest that the manual should not be viewed in isolation. Rather, it follows a series of reforms introduced over the past two years, including the adoption of the Electronic Foreign Exchange Matching System, the Nigerian Foreign Exchange Code and efforts to unify exchange rate determination within the official market.<\/p>\n\n\n\n

Those reforms sought to address longstanding criticisms that Nigeria\u2019s foreign exchange market was fragmented, opaque and vulnerable to discretionary practices.<\/p>\n\n\n\n

\u201cA modern FX market cannot thrive in an environment characterised by opacity, fragmentation, delays, uncertainty, or excessive administrative bottlenecks,\u201d Abdullahi said. \u201cIt requires trust, transparency, liquidity, efficient market infrastructure, prudent regulation, and responsible market conduct.\u201d<\/p>\n\n\n\n

The deputy governor argued that the revised manual would help create those conditions by standardising procedures, clarifying documentation requirements and establishing clearer responsibilities for authorised dealers and market participants.<\/p>\n\n\n\n

The objective is not simply regulatory compliance. It is to reduce uncertainty.<\/p>\n\n\n\n

Foreign exchange markets function most efficiently when participants understand the rules and have confidence that those rules will be applied consistently. Where ambiguity exists, businesses tend to delay investment decisions, traders demand higher risk premiums, and investors become cautious.<\/p>\n\n\n\n

For Nigeria, where foreign exchange remains central to trade, manufacturing, education, healthcare and capital flows, such uncertainty carries significant economic costs.<\/p>\n\n\n\n

This explains why the CBN repeatedly emphasised transparency and consistency throughout the launch event.<\/p>\n\n\n\n

Cardoso also described the revised manual as part of efforts to strengthen \u201cclarity, consistency, and market efficiency\u201d while promising stronger monitoring mechanisms to ensure accountability across the system.<\/p>\n\n\n\n

Whether those goals are achieved will ultimately depend on implementation. Regulations alone rarely change markets. Consistent enforcement does.<\/p>\n\n\n\n

What has changed?<\/strong><\/p>\n\n\n\n

The practical significance of the revised manual lies in its detailed operational provisions.<\/p>\n\n\n\n

While many of the changes may appear technical, they affect a wide range of economic activities, from import transactions and export proceeds to travel allowances and tuition payments abroad.<\/p>\n\n\n\n

Among the notable revisions is the harmonisation of Personal Travel Allowance and Business Travel Allowance disbursements with the revised Bureau de Change guidelines. Under the new arrangement, 75 per cent of PTA and BTA transactions will be processed electronically, while only 25 per cent may be disbursed in cash.<\/p>\n\n\n\n

The manual also increases allowable advance payments for imports from 15 per cent to 30 per cent. For businesses that depend on imported inputs, this could improve transaction flexibility and reduce delays associated with supplier payment arrangements.<\/p>\n\n\n\n

Another important provision concerns export transactions. Processing of Form NXP, the principal export documentation platform, will now be free of charge. The manual also introduces specific provisions governing service exports, technology-sector remittances and Pan-African Payment and Settlement System transactions.<\/p>\n\n\n\n

These additions reflect changes in the structure of Nigeria\u2019s economy.<\/p>\n\n\n\n

A growing share of foreign exchange earnings now originates from services, technology exports and regional trade rather than traditional merchandise exports alone. Regulatory frameworks that fail to recognise those realities risk becoming outdated.<\/p>\n\n\n\n

The revised manual also introduces Non-Resident Investment Accounts and Non-Resident Ordinary Accounts, while allowing foreign companies operating in the extractive sector to repatriate 100 per cent of export proceeds.<\/p>\n\n\n\n

Perhaps more significant for individual account holders is the removal of the mandatory Form A requirement for remittances using ordinary domiciliary accounts.<\/p>\n\n\n\n

Although authorised dealer banks will still be required to verify the legitimacy of transactions, the change eliminates an administrative layer that many market participants considered cumbersome.<\/p>\n\n\n\n

The manual further provides for tuition fee payments of up to $25,000 per semester for undergraduate and postgraduate studies abroad and allows transfers between export proceeds domiciliary accounts and ordinary domiciliary accounts under specified conditions.<\/p>\n\n\n\n

Collectively, these provisions indicate a regulatory approach focused on reducing bottlenecks while maintaining oversight.<\/p>\n\n\n\n

\u201cOur goal is to reduce transaction frictions, improve processing timelines, deepen market confidence, encourage formal market participation, and create a more seamless and efficient experience for legitimate users of Nigeria\u2019s foreign exchange market,\u201d Abdullahi said.<\/p>\n\n\n\n

For businesses and investors, the real measure of success will be whether these changes translate into faster processing, reduced compliance costs and more predictable access to foreign exchange.<\/p>\n\n\n\n

Banks back discipline<\/strong><\/p>\n\n\n\n

Among market participants, commercial banks are likely to play the most critical role in implementing the revised framework.<\/p>\n\n\n\n

As intermediaries between customers and the foreign exchange market, banks will be responsible for applying documentation standards, processing transactions and ensuring compliance with the new requirements.<\/p>\n\n\n\n

It was therefore notable that bank chief executives used the launch event to publicly endorse the reforms.<\/p>\n\n\n\n

Speaking on behalf of the Body of Banks\u2019 Chief Executive Officers, the Group Managing Director of United Bank for Africa, Mr Oliver Alawuba, described the revised manual as a continuation of the CBN\u2019s recent market reforms.<\/p>\n\n\n\n

\u201cComing after the introduction of the Electronic Foreign Exchange Matching System and the Nigerian Foreign Exchange Code, this revised manual reinforces a clear policy direction of the Central Bank of Nigeria, a policy direction that anchors on transparency, ethical conduct, credible foreign exchange discovery, stronger documentation, improved oversight, and greater confidence,\u201d Alawuba said.<\/p>\n\n\n\n

He argued that reforms introduced over recent years had altered perceptions within the market.<\/p>\n\n\n\n

\u201cOne of the things I always ask anytime I ask questions about Nigeria is that two years ago or three years ago, as a banker, if you meet your customer, they will ask you, \u2018Do you have foreign exchange for us?\u2019 But today, when you meet your customer, you will be the one asking the customer whether they have foreign exchange,\u201d he said.<\/p>\n\n\n\n

His remarks reflected the CBN\u2019s broader objective of encouraging foreign exchange inflows into the formal market rather than outside official channels.<\/p>\n\n\n\n

However, Alawuba also stressed that reforms could not succeed without discipline, saying, \u201cWe can\u2019t do this reform without discipline. So what this manual comes with is the discipline of operators and regulators and all stakeholders as we continue to have a sustainable foreign exchange market.\u201d<\/p>\n\n\n\n

A similar theme emerged in remarks by the Group Managing Director of Access Holdings Plc, Mr Roosevelt Ogbonna.<\/p>\n\n\n\n

According to him, previous attempts to deepen Nigeria\u2019s foreign exchange market had often focused on ambitious objectives without first establishing strong foundations.<\/p>\n\n\n\n

\u201cWhat this CBN has done differently is to build from the ground up, build a strong foundation first, build around market discipline, get a code of conduct that works, and moderate behaviour within the financial market,\u201d Ogbonna said.<\/p>\n\n\n\n

He argued that the revised manual would remove ambiguity and allow market participants to operate with greater certainty.<\/p>\n\n\n\n

\u201cThe manual is going to create market discipline, it is going to remove ambiguity, and it is going to ensure that market traders, both buyers and sellers and actors, understand the rules of the game,\u201d he said.<\/p>\n\n\n\n

Those comments show an important reality. Market liquidity depends not only on supply and demand but also on confidence that transactions will be governed by transparent and predictable rules.<\/p>\n\n\n\n

Beyond the manual<\/p>\n\n\n\n

The launch of the revised Foreign Exchange Manual also highlights a broader challenge facing economic policymakers.<\/p>\n\n\n\n

Foreign exchange management cannot be separated from the wider economy.<\/p>\n\n\n\n

Even the most detailed regulatory framework cannot by itself generate export earnings, increase oil production, attract investment or strengthen external reserves. Those outcomes depend on a combination of fiscal policy, monetary policy, production capacity and investor confidence.<\/p>\n\n\n\n

Recognising this connection, the Federal Government used the launch to reaffirm support for ongoing reforms.<\/p>\n\n\n\n

Representing the Minister of Finance and Coordinating Minister of the Economy, Mr Taiwo Oyedele, the Permanent Secretary, Special Duties, Mr Mohammed Danjuma, described the manual as an important component of Nigeria\u2019s economic reform agenda.<\/p>\n\n\n\n

\u201cThis initiative reflects our unwavering commitment to reforms that promote macroeconomic stability, accountability, and sustainable growth,\u201d Danjuma said.<\/p>\n\n\n\n

He noted that the foreign exchange market plays a critical role in facilitating international trade, attracting investment and supporting industrial development.<\/p>\n\n\n\n

However, he acknowledged that effectiveness depends on \u201cclarity, consistency, compliance, and public confidence\u201d.<\/p>\n\n\n\n

Those four elements may ultimately determine whether the revised manual succeeds.<\/p>\n\n\n\n

Nigeria\u2019s foreign exchange market has experienced multiple reform cycles over the years. Many delivered short-term improvements before being overtaken by external shocks, declining oil revenues or policy reversals.<\/p>\n\n\n\n

The challenge for the current reform programme is therefore sustainability. The revised manual provides clearer procedures. It introduces new operational standards. It attempts to align regulation with contemporary market realities. Yet its lasting impact will depend less on the text itself than on how consistently it is applied.<\/p>\n\n\n\n

Cardoso appeared aware of that reality when he reminded stakeholders that implementation would require cooperation across the entire financial system.<\/p>\n\n\n\n

\u201cThe successful implementation of this manual depends on the commitment of all stakeholders,\u201d he said.<\/p>\n\n\n\n

That commitment will be tested as the revised framework moves from policy document to market practice.<\/p>\n\n\n\n

Source: <\/em>https:\/\/punchng.com\/cbn-bets-on-rules-to-stabilise-fx-market\/<\/em><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

CBN bets on rules to stabilise FX market For years, Nigeria\u2019s foreign exchange market has been shaped as much by uncertainty as by supply and demand. Importers complained about delays and documentation bottlenecks. Exporters often questioned whether existing procedures encouraged them to repatriate earnings through official channels. Investors worried about policy reversals and access to… <\/p>\n

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