BANKS NOT TO REPATRIATE FUTURES IF ........


In an attempt to ensure that the futures market for foreign exchange takes off with clear guidelines, the Central Bank of Nigeria on June 24 came out with a new circular to all deposit banks in Nigeria.

The circular reference FMD/DIR/GEN/07/001 signed by S. A Olih, of the financial markets department, directed the banks not to process any request for repatriation of settlement amount of futures contracts if is not accompanied by requisite settlement advice.

This advice is to issued by the organisation authorised to organise the futures aspect of the liberalised market for foreign exchange in Nigeria.

Along with the usual certificate of capital importation, foreign investors in the Over the Counter Forex market are required to present an OTC FX futures settlement advice to be issued by FMDQ to " facilitate the externalisation of the settlement differential between the OTC futures and the inter bank fixing on the date of settlement "

For the avoidance of doubt, says the circular, " requests for repatriation of settlement amount of OTC futures contracts by FPIs (Foreign participating investors) that are not accompanied with the requisite settlement advice should not be processed by any deposit money bank in Nigeria "

It will be recalled that the Nigerian inter bank foreign exchange market took off as scheduled last Monday and the futures segment was to run alongside it.

At the inter bank market, by Friday the Naira closed at N281 to the dollar after a week low of N282.

Thus, compared to the N197 to the dollar officially maintained by the CBN before the liberalisation, the Naira was down by about 30% in one week that also saw the CBN intervening many times to defend it.

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