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Nigeria: CBN Warns Stringent Penalties for Non-Compliance with FX Code

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Nigeria: CBN Warns Stringent Penalties for Non-Compliance with FX Code

(3 Minutes Read)       

Nigeria’s national bank, the Central Bank of Nigeria (CBN) has called on deposit money banks and all market participants to embrace the principles of the Nigeria Foreign Exchange (FX) Code wholeheartedly, cautioning that any individual or institution that violates the FX Code will face swift and decisive sanctions

Nigeria’s national bank, the Central Bank of Nigeria (CBN) has called on deposit money banks and all market participants to embrace the principles of the Nigeria Foreign Exchange (FX) Code wholeheartedly, cautioning that any individual or institution that violates the FX Code will face swift and decisive sanctions. The apex bank disclosed that Nigeria’s external reserves have grown by 12.74 per cent, reaching USD 40.68 billion at the end of 2024 as a result of the various reforms it has embarked on.

Governor, Central Bank of Nigeria (CBN) Olayemi Cardoso stated that the six guiding principles and 52 sub-principles of the FX Code must become the standard for conduct across all participating institutions. All the banks’ CEOs in the country were made to sign a statement of commitment abiding with the Code.

He highlighted that the launch of the Nigeria Foreign Exchange Code (FX Code) reflects the collective vision for a foreign exchange market built on integrity, fairness, transparency, and efficiency, critical pillars for Nigeria’s economic growth and stability, and reaffirmed the collective commitment to shaping a more resilient and transparent FX market. The FX Code represents a decisive step forward, setting clear and enforceable standards for ethical conduct, transparency, and good governance in the nation’s foreign exchange market.

The Governor cautioned that the era of multiple exchange rates, which created privileges for a select few at the expense of most Nigerians, severely undermined market integrity. The USD 7 billion of FX backlogs that have taken over 12 months to verify have led to the discovery of multiple unethical and even illegal practices. The forensic verification process is now nearly complete, and final settlements will be processed.

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The FX Code is a firm rejection of such distortions and an equally firm commitment to a future defined by fairness, trust, and market-driven principles. The Governor informed that the journey towards market reform is already yielding results. According to him, the year 2024 was marked by structural reforms which sought to return the naira to a freely determined market price and ease volatility as several distortions were removed from the market.

The introduction of the Electronic Foreign Exchange Matching System (EFEMS) in December 2024 has improved market transparency and efficiency, noting that since its launch, the naira has appreciated significantly—from ₦1,663.90 on December 2, 2024, to ₦1,536.72 as of 29th January.