The Central Bank of Nigeria (CBN) intends to pump more dollars into the foreign exchange market in continuation of its strategy to further strengthen the Naira. When introduced, the forex should further shove up the value of the naira which is currently trading at N448/$ in the parallel market.
A source in the apex bank, said that the CBN has planned the release of an additional $350 million bringing the total to $570 million to further crash the value of the Dollar. Already this has generated panic among currency traders who are yet to recover from the losses some of them have suffered in the last two weeks owing to sharp and sudden appreciation of the Naira.
Confirming the development, the Acting Director, Corporate communications, Isaac Okorafor, told our correspondent that, with improving reserve levels, the Bank was determined to continuously make forex available to all genuine customers through their banks. The nation’s foreign reserve hit about $29 billion as at Tuesday, last week, a position that has given comfort to the CBN Governor, Mr. Godwin Emefiele and his team to massively intervene in the forex market.
With the current position, those hoarding the hard currencies would have to quickly off-load to reduce their losses. Informed sources speak of the likelihood of a liquidity glut as banks are beginning to send out salespeople to scout for customers to buy the dollar in an effort to avoid losses arising from the expected further appreciation of the naira.
It will be recalled that since last Tuesday the CBN has so far supplied a total of $570 million to the market made up of $80 million for Personal Travel Allowance (PTA), Medicals and school fees, $100 million in wholesale forwards, an additional $350 million planned for injection.
The CBN also gave a directive to commercial banks to sell business and personal travel allowances to retail customers within 24 hours of filing a demand request. This follows complaints that some banks are delaying the sale of forex to retail customers.
The Director, Financial Markets Department, Dr. Alvan Ikoku, in a signed circular to all commercial banks, said banks are mandated to process and meet demands for school fees and medical bills within 48 hours of filing a demand request. He stressed that the new directive has taken effect from 6th of March, 2017 and non-compliance will attract sanctions.
According to the circular, “In view of the CBN’s willingness, capability, and determination to meet foreign exchange demand in the market, and in order to further increase foreign exchange availability to all end-users and ensure that a fair and verifiable exchange rate operates in the market, all banks are hereby directed as follows:
- “Firstly, Open a teller point for retail forex transactions, including buying and selling, in all locations in order to ensure access to foreign exchange by their customers and other users, without any hindrance”.
- “Secondly, all banks must have an electronic display board in all their branches; showing rates of all trading currencies, and customers must insist on processing forex transactions based on the displayed rates”.
- “Thirdly, 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”.
- “Lastly, Banks are mandated to process and meet demands for school fees and medical bills within 48 hours of such application.”
References
- http://www.financialwatchngr.com/2017/03/04/cbn-inject-fresh-350m-forex-market/
- http://www.financialwatchngr.com/2017/03/05/cbn-directs-banks-sell-forex-customers-within-24hrs/
- Read more at: https://dailytimes.ng/business/cbn-directs-banks-sale-fx-customers-within-24-hours/
