CBN intiate Forex intervention for airlines.

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cbn implement new policy for airlines to access forex

In the past year some airlines have refused to fly through Nigeria as a result of recent foreign exchange laws, the most notable of these have been United Airlines and Iberia.

The Central Bank of Nigeria has however approved a Special Secondary Market Intervention Retail Sales (SMIS) for airlines operating in the country to enable them to access foreign exchange.

James Odaudu, Deputy Director, Press and Public Affairs, Ministry of Transportation, announced the plan in a statement  in Abuja on Friday.

Odaudu explained that the intervention was following the interaction with CBN by the Minister of State, Aviation, Sen. Hadi Sirika, on behalf of the airlines.

Odaudu asserted that the intervention was an important one-off exercise dedicated to the clearance of the backlog of matured foreign exchange obligations.

He revealed that the resolution by the apex bank to intervene in the Inter-Bank foreign exchange market through forward settlement was expected to engender market confidence.

According to him, it will also ensure access to Forex by the airlines to settle their obligations and sustain the integrity of the Nigerian Inter-Bank Foreign Exchange market.

“The import of this peculiar exercise is that the CBN will not apply the relevant provisions under clause 2.4.3 (i) of its Revised Guidelines for the Operation of the Nigerian Inter-Bank Foreign Exchange Market.

It provides that ‘all SMIS bids shall be submitted to the CBN through the FXPDs.’

Consequently, CBN shall receive bids from all the authorised dealers.
“The CBN will also not apply the relevant provisions that ‘Spot Forex sold to any particular end-user shall not exceed one per cent of the overall available funds on offer at each SMIS session.’

According to the CBN, whereas the bids are on Spot Forex basis as the Authorised Dealers’ accounts with the CBN will be debited in full for the naira equivalent of the dollar bid amount.

The CBN will settle the bids through forward settlements of two months,’’  Odaudu said.

Odaudu credited Sirika as describing the special intervention by CBN as a “great relief’’ for airline operators in the country.

He said the operators had complained bitterly over their inability to access the required Foreign Exchange to settle the backlog of their obligations which had adversely affected their operations.

Sirika said the aviation sector was critical to the nation’s economy, adding that CBN had taken the right decision that would strengthen existing airlines and inspire confidence in aspiring operators.

Manufacturing companies and producers of agricultural chemicals shall also benefit largely from the intervention.