Relief as CBN set to meet all backlog forex demands

WITH liquid foreign reserves at $28.4 billion, Central Bank of Nigeria (CBN) on Monday announced new policy actions in the Foreign Exchange market to ease the burden being confronted by students, those seeking medical treatment and other foreign currency seekers.

As part of measures included on assurance that the apex bank will now provide direct additional funding to banks to meet the needs of Nigerians for personal and business travel, medical needs, and school fees, effective immediately.

In a statement titled “New Policy Actions In The Foreign Exchange Market” and signed by Acting Director of Corporate Communication, Mr Isaac Okorafor, CBN directed all banks to open foreign exchange retail outlets at major airports as soon as logistics permit.

Also, in order to further ease the burden of travellers and ensure that transactions are settled at much more competitive exchange rates.

“The CBN expects such retail transactions to be settled at a rate not exceeding 20 percent above the interbank market rate.”

On travel allowances, it noted that having cleared the historic backlog of matured letters of credit at the inception of the current flexible exchange rate system, the CBN would immediately begin to provide foreign exchange to all commercial banks to meet the needs of both personal travel allowances (PTA) and business travel allowances (BTA) for onward sale to customers.

“All banks would receive amounts commensurate with their demand per week, which would be sold to customers who meet usual basic documentary requirements.

The bank would also similarly meet the needs of parents, guardians and sponsors who are seeking to make payments of school and educational fees for their children and wards.

“Such payments must be made by commercial banks directly to the institution specified by the customer. The CBN would ensure that this process is as smooth as possible and that as many customers as possible get the foreign exchange they genuinely demand.

“This would also apply to customers seeking to make payments, or purchase foreign exchange, for medical bills and paid directly to hospitals.

“The supply of FX to retail end-users (PTA, BTA, School fees, medical bills, etc) would be sustained by the CBN.”

The bank has equally decided to significantly reduce the tenor of its forward sales from the current maximum cycle of 180 days to no more than 60 days from the date of transaction.

To maintain confidence in the FX market, CBN will immediately begin implementing its articulated programme to clear all the unfilled orders in the interbank FX market.

“Given our plan to meet all unfilled orders, and while provision of FX to the manufacturing sector would remain the CBN’s strong priority, we will no longer impose allocation/utilisation rules on commercial banks.

“Implement an effective intervention programme to support the inter-bank market to ensure adequate liquidity necessary to deliver an efficient FX market.

“Advice FMDQ to activate its FX Order-Book systems as soon as possible and also accelerates the on-boarding of FX clients on the FX Relationship Systems to ensure total transparency of the FX market.”

It however warned that CBN would neither tolerate unscrupulous actions nor hesitate to bring serious sanctions on offenders, be the banks or their staff.