The Central Bank of Nigeria (CBN) on Monday unveiled the Nigeria Foreign Exchange (FX) Code to enhance the integrity and functioning of the country’s foreign exchange market. This comes as the Naira strengthened against the dollar at the black market, appreciating by N10.
In a statement, the apex bank explained that the FX Code was introduced to address risks emerging from the evolving financial landscape in Nigeria. The Code is modeled after the principles of the Global FX Code and international best practices.
According to the CBN, the FX Code aims to promote a fair, transparent, and efficient wholesale foreign exchange market, ensuring confidence among market participants. The Code will reinforce Nigeria’s flexible exchange rate regime while establishing standards to strengthen the integrity of FX operations.
“The FX Code is designed to ensure a robust, liquid, and transparent market where participants can transact confidently at competitive prices that reflect market information, in line with global behavioral standards and best practices,” the CBN stated.
The Code applies to market participants, including authorized dealers licensed by the CBN under the CBN Act 2007 and the Bank and Other Financial Institutions Act (BOFIA) 2020, as well as other entities engaged in wholesale FX transactions.
The FX Code is built on six key principles: ethics, governance, execution, information sharing, risk management and compliance, and confirmation and settlement processes. The CBN also emphasized that the Code incorporates specific provisions to enhance efficiency in the Nigerian FX market and protect it from illegal financial activities.
“Market participants are required to adopt anti-money laundering policies and ensure that illicit financial transfers are avoided to safeguard the integrity of the domestic and global financial systems,” the CBN added.
The FX Code highlights the responsibilities of both institutions and individuals, urging adherence to best practices and clear governance frameworks.
The immediate market reaction to the Code’s release was positive, as the Naira appreciated by N10 against the dollar at the black market on Monday.
