Financial analyst, Bismarck Rewane, said the latest position of the Central Bank of Nigeria (CBN) not sell foreign exchange to Bureau De Change operators could push them out of the forex market.
The renowned economist who is also an analyst at the Financial Derivatives Company Limited (FDC) said it would take the market a few days to adjust to the new, “while the BDCs will be forced to survive or become extinct in the new forex market era”.
The banker stated that the parallel market rate depreciation is expected to continue temporarily, which according to him would lead to a widening of the forex market premium.
At the time of publication USD to NGN exchange rate at the parallel market was N508, which showed a significant improvement from the shock the fx market experienced on July 28, 2021, the second day Nigeria’s apex bank vowed not to sell forex to BDC operators.
On August 3, we reported that some banks were already adjusting to the CBN’s order by selling the dollars for N412/$, find it at: https://infomediang.com/nigerian-banks-sell-us-dollar-for-n412
Godwin Emefiele had described them as saboteurs to the forex policies of the CBN and Nigeria’s economy.
Subsequently, Emefiele channeled the sales of FX allocation to the BDC operators to the financial institutions and directed that fx should be sold to Nigerians who need it for business needs like Personal Travel Allowance (PTA), Business Travel Allowance(BTA), and Medical Bill among others.
Acting on the directive of the CBN, banks immediately established forex teller points for Nigerian business owners who need FX for legitimate transactions.
Banks’ Cumbersome documentation Is An Issue
Reacting to the new order, Rewane, a former board member of Guinness Nigeria said the cumbersome documentation process to access FX by customers would pose a challenge to legitimate users.
He was quoted as saying, “The cumbersome documentation process required by banks will remain a challenge for the public.
He also said the CBN move would spark an increase in volume and turnover in the banking segment of the forex market, “making dollar sales more accessible to the public.”
“This will lead to an appreciation of the exchange rate for Invisibles such as PTA, BTA, and tuition, etc.”
He said that the banks would benefit from the increased forex supply from the CBN and, in return, record an increase in transactions.
Is it the way forward?
Analysts believe that the new CBN policy on Forex would allow the apex bank to be in full control of the FX market
One of their suggestions is that the CBN will have to keep the banks in check so that the banks do not exploit the new policy.
We believe that Nigerians who also need forex should follow the process and presenting the required documents to access the FX from banks.