The recently launched foreign exchange, FOREX, policy by the Central Bank of Nigeria is aimed at reducing the difficulties Nigerians encounter in funding foreign exchange transactions.
The newly signed CBN FOREX policy will be highly beneficial to a lot of Nigerians.
With the pressure mounted as a result of the scarcity of dollar, the foreign exchange policy will help many Nigerians who have foreign transactions to make. Naira slumped to 520 per dollar on Monday, February 20; the FOREX policy has lots of good embedded in it for Nigerians who deal with foreign currency.
Many people stand a chance of gaining from the new policy set up by the CBN. There is no doubt the policy came at a time Nigerians need it the most considering the exchange rate that has crippled most businesses and has calmed several travellers down.
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Check out the benefits accrued to the newly unveiled foreign exchange policy below:
1. CBN to fund business and personal travels
2. Nigerians can get FOREX through deposit money banks
3. Medical bills by Nigerians can be paid directly to the specified banks outside Nigeria through the banks
4. The supply of FOREX to retail end-users is to be sustained by the CBN
5. Nigerian students can pay their school fees directly to specified institutions through the banks
6. All retail transactions can be settled at a rate not exceeding 20 percent above the prevailing inter-bank market rate
7. FOREX retail outlets will be opened at major airports to ease the travelers and ensure their transactions get settled
8. Priority FOREX allocation will be given to the manufacturing sector
The new foreign exchange policy will also remove the allocation rules on commercial banks. This policy also comes with the reduction of CBN’s forward sales tenor which dropped from the current maximum cycle of 180 days to 60 days from the date of the transaction.
The foreign exchange is the market for a national currency anywhere in the world; the financial centres in the world function as a unit in a single market.
The foreign exchange market performs three functions basically. The transfer function deals with the conversion of one currency to another. The purchasing power between the two countries is being considered.
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The credit function of the market deals with the provision of credit to promote foreign exchange while the hedging function is aims at fencing the foreign exchange risks.
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