The Central Bank of Nigeria has issued regulations on Renminbi transactions in order to kick-start the N720 billion bilateral currency swap agreement it had with the Peoples Bank of China.
The regulations were conveyed via a memo to authorized dealers, the deposit banks and merchant banks, Wednesday signed by Alvan E. Ikoku, director, financial markets department of the CBN.
The regulations include all authorized dealers being mandated to open Renminbi accounts with correspondent banks and advise the CBN with the account details, which may either be with a bank onshore or offshore China.
Importers intending to import from China are required to obtain proforma invoices denominated in Renminbi as part of the documents required for the registration of Form M.
The CBN indicated that foreign exchange (FX) purchased in the window shall not be used for payments on transactions in which the beneficiaries are not in China and that authorized dealers are exempt from opening domiciliary accounts denominated in Renminbi for customers.
It said the Renminbi sales shall be applicable only to trade-backed transactions, while authorized dealers are required to utilize funds within 72 hours from the value date, failing which such funds must be returned to the CBN for repurchase at the apex bank buying rate.
On the conduct of the intervention, the CBN says bids shall be settled spot through a multiple-price book bidding process and will cut off at a marginal rate, which would be disclosed after the conclusion of the special SMIS-retail process.
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