Friday, 16 February 2024 04:37

CBN sets limits on oil firms' FX repatriation from crude

Rate this item
(0 votes)

Central Bank of Nigeria has set a limit on foreign currency transfers from crude export proceeds by international oil companies to their parent firms, in its latest measure to improve dollar supply in the local currency market.

In a circular dated Feb. 14, the CBN said banks could in the first instance transfer a maximum of 50% of crude export proceeds to oil companies abroad.

They could then transfer the balance after 90 days of the deposit of the proceeds.

However, because international companies lend and borrow between themselves in a process known as "cash pooling", analysts expect the impact of the new rule to be marginal.

Africa's largest economy has been experiencing crippling dollar shortages that has pushed its currency to record lows, although central bank governor Olayemi Cardoso has said that dollar liquidity was improving.

The latest move is part of a series of central bank reforms aimed at boosting dollar liquidity which dried up in the aftermath of a previously low oil price in 2016 and then disruptions associated with the Covid-19 pandemic.

On Thursday, the naira fell to a record low of 1,606 to the dollar after the circular was made public. It later recovered to close at 1,476 naira, around the level on the unofficial parallel market.

The central bank said it wanted to ensure that foreign transfers are done with minimal impact on liquidity in the currency market while supporting oil firms to have easy access to their crude proceeds.

Cardoso has said the currency will adjust once rules for market participants are made clear.

Last week, the central bank hiked open market rates to draw investors to bills as inflation climbed to a nearly three-decade high and lagged behind the benchmark policy rate.

The bank has also scrapped caps on forex spreads on the interbank market.

 

Reuters

April 04, 2025

Oil set for worst week in months over Trump's new tariffs

Oil prices fell further in early Asian trade on Friday, and were on track for…
April 02, 2025

Natasha outsmarts Kogi govt, Police; ‘drops’ from sky to jubilant crowds

In a spectacular display of defiance, Senator Natasha Akpoti-Uduaghan turned the Kogi State Government and…
April 04, 2025

Flight attendants say you should never order these 5 items on a plane

Amanda Mactas Surely you are no stranger to a fashion faux pas, but when it…
March 30, 2025

Two 'proof of heaven' stories and one 'proof of hell' that had atheist calling out…

Ole Braatelien What happens to our consciousness the moment we die? Christians believe our souls…
April 02, 2025

Ponzi schemes: New law slams 10-year jail term, N40m fine - SEC

Nigeria’s Securities and Exchange Commission (SEC) has finally declared war on Ponzi schemes, with a…
April 04, 2025

What to know after Day 1135 of Russia-Ukraine war

RUSSIAN PERSPECTIVE Significant progress made on Ukraine ceasefire – Putin aide The US-brokered energy truce…
March 28, 2025

Bill Gates: Within 10 years, AI will replace many doctors and teachers—humans won’t be needed…

Tom Huddleston Jr. Over the next decade, advances in artificial intelligence will mean that humans…
January 08, 2025

NFF appoints new Super Eagles head coach

The Nigeria Football Federation (NFF) has appointed Éric Sékou Chelle as the new Head Coach…

NEWSSCROLL TEAM: 'Sina Kawonise: Publisher/Editor-in-Chief; Afolabi Ajibola: IT Manager;
Contact Us: [email protected] Tel/WhatsApp: +234 811 395 4049

Copyright © 2015 - 2025 NewsScroll. All rights reserved.