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Nigeria: CBN Further Crashes Dollar to N360/$ At Banks – Leadership

HomeNewsNigeria: CBN Further Crashes Dollar to N360/$ At Banks – Leadership
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Nigeria: CBN Further Crashes Dollar to N360/$ At Banks – Leadership
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    Alex Ikechukwu
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The Central Bank of Nigeria (CBN) has pegged dollar sale to invisibles such as Basic Travel Allowance (BTAs), medicals and school fees abroad at N360 per dollar.

This is even as the apex bank said yesterday that it has also released the sum of $85 million for onward sale to the retail end-users under the intervention window.

It also offered the sum of $100 million to authorised forex dealers in the interbank wholesale window to meet the requests of genuine wholesale customers in other aspects of the market.

CBN’s acting director in charge of corporate communications, Mr. Isaac Okorafor, said the rates in the interbank window for wholesale transactions would still be determined by activities in the interbank market.

Okoroafor announced that all banks had also been directed to immediately post the new N360 per dollar rate on electronic display boards in the banking halls of their branches, adding that examiners from the CBN will visit the banks to ensure the new rates are implemented.

He reiterated the apex bank’s directive to all banks to process and meet the demand for travel allowances (PTA/BTA) by end-users within 24 hours of such application, while applications for school fees and medical bills are to be met within 48 hours of such application.

Okorafor warned that the new move, aimed at further easing access of genuine end-users to forex, prohibits banks from selling foreign exchange funds meant for invisibles to Bureau De Change.

Going forward, he said, all banks would receive amounts commensurate with their demand per week, which would be sold to customers who meet usual basic documentary requirements.

He also urged customers to report any erring bank to the CBN for investigation and appropriate sanction.

The CBN crashed the price of dollar from N520 per dollar to N377 as at Sunday through its intervention window within three weeks.

The apex bank also said it will immediately deploy its examiners to all the commercial banks to monitor implementation of the directive and ensure compliance with the new retail rate.

There had been complaints that some banks are delaying the sale of forex to retail customers in contrast to the new FX policy issued by the CBN recently.

Beyond its earlier directive that all banks should open teller point for retail FX transactions in all their branches, the CBN said all the banks must have an electronic display board in all their branches, showing rates of all trading currencies and that customers must insist on processing FX transactions based on the displayed rates.

Banks are mandated to process and meet the demand for Travel Allowances (PTA/BTA) by end-users within 24 hours of such application as long as the end- users meet basic requirements already outlined in earlier directives, with a mandate to process and meet demands for school fees and medical bills within 48 hours of such application.

The appreciation of the naira against the US dollar is taking its toll on the parallel market and by extension, Bureau de Change (BDCs).

President of the association of currency traders in Nigeria, Alhaji Aminu Gwadabe told our correspondent that his members suffered losses of about N130 million from last week’s allocation when the BDCs who got dollar allocations from the CBN at N381 per dollar were unable to sell, owing to drastic fall in the price of dollar at the street market.

The insistence of the public not to buy dollars for allowable invisible transactions such as medicals, school fees, personal and basic travel allowances above the N375 per dollar from the BDCs, a rate which is lower than the BDCs’ purchasing rates of N381 per dollar, Gwadabe said, is a challenge the operators are grappling with.

According to Gwadabe, his association is yet to get a response from the CBN on their request for a review of the rates, even as they can no longer operate at a loss.

“Up till now they are yet to reply to our request. It appears it is taking time and the unfortunate aspect is that the BDC cannot operate with a rate that is higher than what is obtainable at the bank and at the parallel market”, he told LEADERSHIP.

Not a few people believe that the CBN is achieving its aim of closing the hitherto wide gap between the official market and the black market.

Commenting on the issues, Associate Prof. and head of department at Nasarawa State university, Dr. Uche Uwaleke, observed that there was no doubt that the gap between the official and parallel market forex rates is narrowing by the day as a result of improved liquidity in the forex market engendered by the CBN.

He said, “The apex bank’s sustained interventions lately made possible by accretion in foreign reserves has resulted in improved supply to the extent that in some cases, the Deposit Money Banks are unable to take up all that is offered to the market by the CBN.

“The recent forex rules by the apex bank have also resulted in improved access to forex, especially for invisibles to the extent that banks are now encouraging their customers to come for PTAs, BTAs etc. in view of the less stringent conditions attached, the requirement for tax clearance certificate has been removed”.

He added that the CBN’s directive with respect to opening offices at airports and the use of dedicated teller points by commercial banks has also contributed to improving access to forex.

“In the light of the favourable international oil market condition, the CBN interventions in the forex market should be sustained. As long as the source of this forex remains chiefly oil, the apex bank should continue to ignore calls to float the naira until the export base of the economy is sufficiently diversified”, he stated.

In that same vein, head of Research at Sterling Capital, Sewa Wusu, who commended the CBN on its achievement of a convergence of rates at both the parallel and interbank market said the present tempo at the foreign exchange market was sustainable.

He noted that the CBN ought to be given accolades on being able to bring to fruition its aim of getting the fingers of speculators burnt in the foreign exchange market.

Wusu said, “The CBN governor recently said that speculators will get their fingers burnt and we can see that statement coming to pass. We are moving towards getting the true value of the naira because the speculators are no longer having it good in the market. Their activities drove the value of the naira to N520 or there about, which is not a true reflection of the naira.

“This has been a good move because the economy of this country matters to a whole lot more people than the profit of the speculators and if the oil price remains at this level and the calm in the Niger Delta region is maintained, I believe that the CBN will be able to keep up the supply”.

According to him, the recent rise in crude oil price coupled with the rise in production output as well as the calm in the Niger Delta region presents a good case for the sustainability of the supply of foreign exchange by the apex bank.

This was also the view of the Managing Director of Cowry Assets Management Limited, Johnson Chukwu, who said that the regular intervention of the CBN to ensure the convergence of rates as well as keeping the forex market stable will be sustainable under the present conditions.

Chief Executive of Financial Derivatives Company Limited, Bismarck Rename, in an email note however said, with oil price now trending around $50 per barrel and the forward contracts (postdated cheques) now maturing, the pressure on the external reserves will soon begin to pile up.

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