Last Updated on October 29, 2021 by Ope Quadri
It seems sanity is gradually returning to Nigeria’s foreign exchange market as commercial banks sold one U.S. dollar for N412 Tuesday, August 3, 2021, in major banks across the country.
InfomediaNG research revealed that the financial institutions are obeying the new FX order of the Central bank of Nigeria (CBN), at least for the first time in five years, if not for a decade.
Recalled that Godwin Emefiele, governor of the apex bank, handed down a “military” warning to banks on July 27, 2021, after taking the most courageous move to kick Bureau De Change operators out of the forex chain.
They were accused of undermining the economic goals of the Federal Government and turned to conduits through which money laundering was executed.
For years, the CBN had allowed the BDC operators to play a major role in FX distribution in the market.
Unfortunately, BDC had become so powerful that buyers and investors trusted the price on the parallel market price than the official CBN price.
Many times, the apex bank had had to adjust its official price to slightly confirm with the price on the streets.
Interestingly, one can not totally junk the blame on BDC operators, the banks turned them to a demigod in the forex value chain.
Specifically, some Nigerian banks that bought official rates from the CBN either hoard or sell to some of their colleagues who are also members of the BDC, thereby making it difficult for investors who need forex for their businesses.
Will CBN’s New Order Make Naira Regains Its Value?
Time can only tell, but signals from across the country show that the Nigerian currency may bounce back if the new CBN order is implemented to the letter.
For instance, Guaranty Trust Bank, Zenith Bank sent an email to InfomediaNG team last week, and we believed other customers across the country received similar updates, stating that forex teller points had been set up as directed by the apex bank.
Reports show that banks sell USD for N412 as against their initial practices whereby they operated FX like a cult.
Naira had plunged to an all-time depreciation, selling for N525 against the U.S. dollar at the parallel market on July 28, 2021
The fall occurred barely 24 hours after CBN stopped the sales of forex to the BDC operators, who some people prefer to call black marketers because of their counterproductive practices in the sector.
Since then, the weekly allocation for the BDCs is being sold to the financial institutions to meet legitimate forex demand for ordinary Nigerians and those whose businesses depend on foreign currencies.
Don’t forget, you can find the application requirements for BTA and Personal Travel Allowance at: https://infomediang.com/forex-for-personal-travel-allowance-bta
Each traveler it was gathered, is now entitled to buy $4,000 per quarter for personal travels and $5,000 per quarter for business travels.
At the time of publication those who need dollars to pay school fees abroad, foreign medical bills, and for Business travel Allowance (BTA) can now buy the USD at N412.
N412 isn’t bad if the official CBN rate is N410. A profit margin of N2 is fair and we hope that the banks continue to be “obedient”.
The new CBN order, expectedly, will definitely have implications, but it’s going to be temporary if the apex bank refused to back down on the pressure from the association of BDC operators.
Ope is the Head of Content at InfomediaNG. He’s a researcher whose interests cut across real estate investment, stocks, financial technology, and youth empowerment. He’s awesome in Content Marketing and SEO. Favourite Tools: Google Analytics, Canva, UberSuggest