CBN Set to deepens Forex Market further to Sustain Liquidity

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Every indications that emerged saturday affirmed planned by the Central Bank of Nigeria (CBN) to inject more foreign currencies into the forex market with a view to ensuring steady liquidity in the interbank market.

The expected fund injection is coming as the forex market awaits a lower exchange rate, which will be advised latest Monday morning and also  to calmed the earlier apprehension over the ability of the monetary authority to sustain the intervention.

This latest effort is coming on the heels of further increase in the sale of dollars to the bureaux de change (BDC) operators from $8,000 to $10,000 per week.

In response to further funds injection into forex market expectation, the acting Director, Corporate Communications of the CBN, Isaac Okorafor, said the CBN was determined to sustain the provision of liquidity in the foreign exchange market in order to enhance accessibility and affordability for genuine end-users.

The CBN  had on Friday disclosed that it had received reports that some customers seeking to buy forex for business travel allowance (BTA), personal travel allowance (PTA), medical and school fees were being frustrated by some banks with the false claim that the CBN was not allocating enough forex for such invisible items.

Upon the hint  that  the CBN dropped that a lower exchange rate would  be advised latest Monday morning, a uthoritative sources at the apex bank have indicated that the bank was considering at least a N5 reduction for PTA/BTA and medical and school fees at both the bank and BDC segments.

Amehnews recalls that, the CBN had issued stern warning to deposit money bank compelling them that it was only the prerogative of the customer to decide the mode of payment, either as dollar cash or card.

The bank  further warned that it prefer red the mode of dispensing PTA/BTA through cash payment and has threatened to impose stiff sanction not only on the bank but also the CEO that failed to obey this directive.

This warning came based on information received by the CBN through its misery shoppers , who complained that banks were turning back their customers. The apex bank further directed that any bank customer turned back at any branch nationwide should report such bank through its hot line.

It urged any customer that is not attended to within 24 hours for BTA/PTA or 48 hours for tuition and medical fees should call a dedicated number or send an email to the Consumer Protection Department of the CBN, with the name and branch of the non-cooperating bank.

The accusation against the banks in a statement signed and released by  the CBN spokesman , titled: “There is Adequate Forex for PTA, BTA, Tuition & Medical Fees,” said such claim by banks was totally untrue.

According to the CBN, all banks have more than enough stock of forex in their possession for the purpose of meeting genuine customers’ demand for BTA, PTA, tuition and medical fees. “Indeed, on a weekly basis, the CBN has been selling at least $80 million to banks for onward sale to their customers for these invisible items.

“Members of the public seeking to buy forex for the above-mentioned purposes are, therefore, advised to go to their banks and obtain their forex,” it added.

“Furthermore, no customer should accept to buy forex from any bank at more than the currently prescribed rate of N360/$1,” it added

The development in the market negatively impacted the performance of the Naira on the parallel market as it fell to N391 to the dollar saturday, lower than the N384 to the dollar it was the previous day.

The CBN had last Monday directed all banks to immediately begin the sale of FX for BTA, PTA, tuition and medical fees to customers at not more than N360 per dollar. The CBN explained that it will sell to banks at N357 per dollar, adding that banks are expected to post the new rates in the banking halls of their branches immediately.

Also, barely 24 hours after the policy was announced, the CBN lowered the rate at which dollar inflows from International Money Transfer Operators (IMTOs) are sold to BDC operators to N360/$1, from the N381/$1 it was previously. With this directive, the BDCs were expected to sell the greenback to retail end-users at not more than N362/$1, lower than the N400/$1 it used to be sold at this segment of the market.

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