CBN YUAN SWAP REGULATIONS AMIDST CONTINUED RESERVES DROP

The Central Bank of Nigeria has issued regulations for the take off of bi- weekly bid for Chinese currency transactions as follow up to recent currency swap deal even as Nigeria's foreign reserves went down further, according to recent updates.

In a circular signed by its Director of Financial Markets, Dr Alvan Ikoku and pasted on its website yesterday, June 7, transactions in the Remindi(Yuan) under the swap arrangement, will be used only to finance trade and direct investment; to maintain financial market stability and for other purposes, both parties to the swap deal may decide on in future.

The circular also says that only authorised dealers in the form of commercial and merchant banks will be allowed to access the bi-weekly CBN intervention bidding sessions on the Yuan.

These dealers must open Yuan domiciliary accounts with correspondent banks and advice the CBN accordingly; ensure importers who want to access Yuan bids obtain proforma invoice denominated in Chinese currency as part of the documentation, and also ensure that purchased forex are used only to pay China based beneficiaries.

Also there will be no payment for Letters of credit under the swap unless routed from supplier/beneficiary through his bank to the issuing bank.

Bills for collection too must be routed through issuing banks directly or through offshore correspondent banks.

There will be no spot fx transaction charges for transactions executed through the CBN intervention window but authorised may earn not more than 50k on each customers bid.

Finally, dealers are to use funds allocated at the bid weekly sessions within 72 hours or return same to the CBN and no customer is to be asked to open Remindi (Yuan) domiciliary accounts.

Meanwhile, according latest figures obtained from the CBN website, Nigeria's foreign reserves continued to drop, inspite of still high crude oil prices and production level.

It dropped by 0.08% to $47.436bn on Wednesday June 6 from the $47.472bn last stated by Henates in follow up analysis.

It had eased from the June 4 figure to $47.452bn on June 5, 2018.