How forex market should operate

Interesting article at Vanguard, author explains how Forex market should operate. Article is based on proposal for a liberalized foreign exchange market in Nigeria and its economic benefits.

Two most interesting sections selected by author are:

• How market will operate
• Payment for import and forex auction

"3.6 HOW THE MARKET WILL OPERATE
The CBN will consolidate the distributable portion of the dollar earnings monthly (or at worst bimonthly) in arrears. The realizable values will be published in appropriate government bulletins monthly.

3.6.1 The CBN would issue warrants denominated in dollars monthly without fail to each beneficiary of federally derived dollar revenue according to constitutional provisions with regard to sharing of such revenue.

3.6.2 The beneficiary of the dollar warrant (strictly not cash) (federal, state, local governments, statutory agencies etc) will approach their separate bankers with their dollar warrants for conversion of all or part of the dollar warrant into naira for its corporate budgetary obligations which cannot be paid in dollars (since the dollar is not legal tender in Nigeria).

3.6.3 All buying and selling of currencies will be carried out through a bank or any other such denominated financial institution.

The local bank officer on receipt of the request would seek current rate confirmation from its head office before concluding a deal."

Read more here: Dollar allocations