The Central Bank of Nigeria, CBN, has explained that its new foreign exchange policy is to cushion the hardship faced by Nigerians in paying school fees abroad, medical bills and travel expenses.

The policy announced on Monday was sequel to last Thursday’s directive by the National Economic Council, NEC, for immediate review of the FOREX policy to stem the widening gap between the inter-bank foreign exchange and parallel market rates.

The new policy takes immediate effect.

The NEC meeting presided by Acting President Yemi Osinbajo had expressed concern over the prevailing exchange rate situation in the country, especially the widening gap between inter-bank and the parallel market rates.

While inter-bank rate, which is the official exchange rate approved by the CBN, stood at about N308.50 to the dollar, the rate at the parallel market, which is readily accessible by most Nigerians, rose to as high as N510 to the dollar last week.

The Bank, in a statement on Monday by its spokesperson, Isaac Okorafor, explained that the new policy was to ease the difficulties encountered by Nigerians in obtaining funds for FOREX transactions.

Consequently, the Central Bank said henceforth it would be providing direct additional funding to deposit money banks to meet the needs of Nigerians for personal and business travels, medical needs, and school fees.

Such retail transactions, the CBN said, would be settled at a rate not exceeding 20 per cent above the inter-bank market rate.

On travel allowances, the Central Bank said it would immediately begin to provide FOREX 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 would receive amounts commensurate with their demand per week, which would be sold to customers who meet usual basic documentary requirements,” the CBN said in a statement.

Similarly, commercial banks would henceforth make payments on behalf of parents, guardians and sponsors in need of FOREX for their children and wards’ school and educational fees directly to the institutions they specified.

Equally, customers seeking FOREX to pay or settle medical bills would also have to pay directly to designated hospitals through their banks.

The Central Bank said it would ensure the process was as smooth as possible, by supplying the FOREX to as many retail end-users as genuinely demanded for PTA, BTA, school fees, medical bills, etc.

Besides, to further increase the availability of FOREX to all end-users, the CBN said it decided to significantly reduce the tenor of its forward sales from the current maximum cycle of 180 days, to no more than 60 days from the date of transaction.

In addition, to ease the burden of travellers and ensure transactions were settled at much more competitive exchange rates, all banks were directed to open FOREX retail outlets at major airports as soon as possible.

Other steps approved by the bank to cushion the difficulties faced by Nigerians include the immediate implementation of a programme to clear all unfilled orders in the inter-bank FOREX market as well as plan to meet all unfilled orders.

While reaffirming its commitment to prioritise the provision of FOREX to the manufacturing sector, the CBN said it would no longer impose allocation/utilisation rules on commercial banks.

Emphasising the need for total transparency and efficiency in the operations of the FOREX market, the Bank warned it would neither tolerate unscrupulous actions nor hesitate to bring serious sanctions on offending individuals, banks and their staff.

“The Bank therefore encourages market participants to assist in ensuring that these new measures engender the preservation of our external reserves, stability of our financial system, and growth of our economy to the benefit of all Nigerians,” the statement said.