There are indications that the Central Bank of Nigeria (CBN), has decided to go tough on commercial banks and Bureau de change operators as fresh pressure mounts on the local currency in the foreign exchange (FX) market.
In order to ramp up liquidity in the foreign exchange market, the financial regulator compelled commercial lenders to sell forex to all travelers (customers and non-customers of the banks), threatening severe sanction against any bank that fails to comply with its directive. It also mandated bureau de change operators to compulsorily buy forex trice a week, otherwise, their licenses would be revoked.
These directives were in response to accusations that banks and bureau de change operators were hoarding forex in order to create artificial scarcity. The Central Bank Governor, Mr. Godwin Emefiele some weeks ago in Abuja led other officials to monitor banks’ compliance to the order that they sell Personal Travel Allowance (PAT) to those who need it across the counter.
“The use of the word compulsory is not even a legal word and therefore, it has to be dropped from their new directives. “We have, however, written our complaints and concerns to the CBN management to put it on hold pending an engagement with them soon,” Alhaji Aminu Gwadabe, president, Association of Bureau de Change Operators of Nigeria (ABCON) told stockswatch in a Whatsapp message.
The naira has declined marginally by 0.13 per cent in the last one month to $/N360.97 at the Investors’ & Exporters’ Forex Window.
The CBN has expressed fears that expected huge liquidity injections in the course of the implementation of the 2018, increasing monthly FAAC injections and political spending in the run-off to the 2019 elections, would take toll on the naira.
But Gwadabe attributed the spike in exchange rates to investors’ apathy at the stock market and the I&E forex window; political anxiety; renewed fictitious demand and capital flight.
“The decision of the CBN is very inhibitive and will make the operations of the BDCs difficult and highly uncompetitive in the market,” the ABCON boss noted.
Kunle Ezun, treasurer, Ecobank in a chat explained that, the decision of the regulator to increase liquidity in the forex market was a pointer that the local currency would come under intense pressure as the country moves closer to the 2019 general elections.
“After the MPC meeting, we saw some pressure on the naira at the black market. The rate went up to as high as $/N367, which made them to respond. Although some of us expected it, but we never thought it would start that early”.