CBN endorses Wema Bank as foreign exchange primary dealer

By Chioma Obinagwam

Following the recent commencement of trading on the Nigeria Interbank Foreign Exchange (NIFEX), and the announcement of the movement from the official exchange rate to a market-determined system by Godwin Emefiele, the Central Bank of Nigeria’s (CBN) governor, Wema Bank Plc has been appointed as one of the Primary Dealers in Foreign Exchange Inter-Bank Market (FXPDs) by the CBN.

With this new appointment, Wema Bank is positioned as one of the Banks to deal with the CBN in wholesale foreign exchange transactions (Minimum of $10m) on a two-way quote basis amongst other obligations as stated in the FXDP Guidelines.

While expressing pleasure at this development, Mr. Segun Oloketuyi, Chief Executive Officer of Wema Bank Plc. stated that this is a great achievement for the bank which is presently undergoing a thorough business evolution.

“The appointment of Wema Bank as a Primary Dealer definitely implies that we control a relatively higher proportion of forex market volumes, which would be positive for our net interest revenue (NIR) line,” he said.

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Speaking further, Oloketuyi said that there is generally a huge backlog of forex demand (letters of credit, repatriations, foreign investment outflows, etc.) in the Nigerian economy; however, Wema Bank’s appointment as one of the Primary Dealers in Foreign Exchange Inter-Bank Market (FXPDs) by the Central Bank of Nigeria (CBN) will go a long way in fostering the bank’s bid to serve its customers better, by attending to the backlog with no further ado.

While unveiling the broad forex market framework, Godwin Emefiele, Governor, Central Bank of Nigeria (CBN), had said the FXPDs will be able to deal in minimum sizes of $10 million for spot transactions and at least $5 million for forwards, Forex swaps and futures.

The Foreign Exchange Primary Dealers (FXPDs) system is one where interested Authorized Dealers are accorded access to transact FX products directly with the CBN.

The FXPD authorised by the CBN would deal directly with the apex bank for large trade sizes on a two-way quote basis.

Under the guidelines for primary dealership in forex products, FXPDs will operate with other dealers in the Inter-bank market, amongst other obligations that will be stipulated in the Foreign Exchange Primary Dealers (FXPD) regulation.