Nigeria foreign exchange market: How to buy FX across the counter for PTA/BTA-Financengr. The Central Bank of Nigeria (CBN) has approved the sale and purchase of foreign exchange across the counter in banks and other licensed financial institutions.
Further to this approval, foreign exchange market will now be thrown open for customers to access the foreign exchange across banks where they are not even account holders as against the initial practice where this product can only be accessible to account holders.
This is in line with CBN commitment to further improve accessibility of the foreign exchange to all who need same for their transactions home and abroad without hitches.
FOREIGN EXCHANGE MARKET: FOREIGN EXCHANGE
Foreign exchange is the conversion of country’s currency into another. While foreign exchange market is the market where currencies are been traded, can be online or across the counter.
TYPES OF FOREIGN EXCHANGE MARKET:
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The foreign exchange market is of two categories namely
. Spot Market: This is referred to as the immediate delivery market, which represents the market where sales and purchases of currencies are settled. This is referred as spot transaction because the trade took place within two days.
. Forward Market: This is the practice where the currency is not sold immediately, rather the transaction occurs at a future date which could be up to or more than 90 days. But at a fixed exchange rate agreed initially.
FUNCTIONS OF FOREIGN EXCHANGE MARKET:
. Credit Function: FOREX makes provision for short term funds/credit available to importers of goods and services to enable a smooth flow of their business operations. This is normally achieved in terms of Letter of Credit and Bills for collection, where trade agreements are reached between the shipper and the buyer/importer.
. Transfer Function: This facilitates the transfer of funds from one country to the other for settlement and payment for goods and services. Typically transfers the purchasing power from one country to another.
. Economic Stability: The essence and visible effect of FOREX in most countries can be associated with stabilizing the economy where the stronger currency dominates, improves terms of trade as well through exchange of currency and all that.
FEATURES OF FOREIGN EXCHANGE MARKET:
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. It has a huge trading volume:This is the most asset class in the world with a high volume liquidity at all times.
. Continuous Operation: It has an unlimited time activities that run 24hrs a day, with a low action at weekends, making transactions and exchange a continuous and rapid for the investment and business purposes.
. Low level profit: This is not actually true at some cases, but mostly visible unlike other fixed income markets.
. Take profit and stop loss: It has a leverage of opting out of the market once a trade risk appetite has achieved its threshold.
FOREIGN EXCHANGE MARKET: CBN FOREIGN EXCHANGE POLICY IN NIGERIA
In continuation of efforts to increase the availability of Foreign exchange in order to ease difficulties encountered by Nigerians in obtaining funds for foreign exchange transactions, the Central Bank of Nigeria (CBN) is providing direct additional funding to banks to meet the needs of Nigerians for Personal and Business Travel, Medical needs and School fees, effective immediately.
The CBN expects such retail transactions to be settled at a rate not exceeding 20 percent above the interbank market rate.
A. Travel allowances:
Having cleared the historic backlog of matured letters of credit at the inception of the current flexible exchange rate system, the CBN would immediately begin to provide foreign exchange to all commercial banks to meet the needs of both Personal Travel allowances (PTA) and business travel allowances (BTA) for onward sale to customers.
All banks will receive amounts commensurate with their demand per week, which could be sold to customers who meet usual basic documentary requirements.
B. School and Medical Fees:
Similarly the CBN will meet the needs of parents, guardians and sponsors who are seeking to make payments of school and education fees for their children and wards. Such payments must be made directly by the commercial banks to the institution specified by the customer.
The CBN will ensure that this process is as smooth as possible and that as many customers as possible get the foreign exchange they genuinely demand, this would also apply to customers seeking to make payments, or purchase foreign exchange, for medical bills and paid directly to hospitals . The supply of FX to retail end users will be sustained by CBN.
C. Forward sales Tenor:
In order to further increase the availability of foreign exchange to all end users, the CBN has decided to significantly reduce the tenor of its forward sales from the current maximum cycle 180 days, to more than 60 days from the date of transaction.
D. FX Sales at Major Airports:
In order to further ease the burden of travelers and ensure that transactions are settled at much more competitive exchange rates, the CBN hereby directs all banks to open FX retail outlets at major airports as soon as logistics permit.
E. Increase efficiency of Foreign exchange Market:
In order to maintain confidence in FX market, the CBN will immediately take the following steps:
- Begin implementing its articulated program to clear all unfilled orders in the interbank FX market
- Given its plans to meet all unfilled orders, and while provision of FX to the manufacturing sector will remain the CBN strong priority, they will no longer impose allocations/utilization rules on commercial banks.
- Implement all effective intervention program to support the interbank market to ensure adequate liquidity necessary to deliver an efficient foreign exchange market.
- Advise FMDQ to activate its FX order-Book system as soon as possible and also accelerate the on-boarding of FX clients on the FX relationship systems to ensure total transparency of FX market.
Given the CBN objective to continuously and vigorously pursue a transparent, liquid and efficient FX market, the bank reiterates it would neither tolerate unscrupulous actions nor hesitate to bring serious sanctions on offenders, be they banks or their staff.
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FOREIGN EXCHANGE MARKET: HOW TO BUY FX ACCROS COUNTER IN NIGERIAN BANKS FOR BTA/PTA
1. You must be able to produce evidence of business registration for BTA Business travel allowance.
2. Applicants must be 18 years and above.
3. BTA and PTA cannot be obtained at the same time within a quarter.
4. Eligible applicants will obtain maximum of $4000 for PTA and $5000 for BTA
Documentation for PTA:
1. Valid international passport (only Nigerian passports holders)
2. Air return ticket (flight must originate from Nigeria for the trip)
3. Valid visa to country of destination or appropriate green card or resident permit (West African countries are not eligible)
4. Duly validated BVN.
Documentation for BTA:
1. Evidence of business registration
2. Letter of introduction or nomination from competent body stating the purpose of the visit. Other information required above as well. The forex exchange market is however a volatile one.
To buy foreign exchange for PTA/BTA, Kindly visit any Skye Bank branch within your neighborhood.
The hitches in the Nigerian foreign exchange market has further been cleared given to the good goodwill of CBN Governor to improve businesses and investments who are core drivers of the economy to further better the live of Nigeria citizens. You can as well check https://www.abokifx.com for your daily currency exchange rate.
Raphael is a seasoned and dynamic writer, with interest in Banking, personal finance, entrepreneurship development. A councillor and motivational speaker.