Amid CBN probe of FX defaulters, sales of FX to banks fall to $1.65 billion in August 2021
The Central Bank of Nigeria’s total foreign exchange sales to authorised dealers (deposit money banks) declined to $1.65 billion in August 2021 from $2.05 billion in July 2021.
The CBN disclosed this in its report on the supply of forex for August of 2021.
In the review period, the CBN directed all commercial banks to publish the names and Bank Verification Numbers (BVNs) of all defaulting customers that presented fake travel documents to purchase BTA/PTA in order to curb unwholesome practices.
What the CBN is saying
According to the report, “The Bank continued to intervene in the foreign exchange market to ensure systemic stability and adequate liquidity. Total foreign exchange sales to authorised dealers by the Bank was US$1.65 billion in August, representing a decrease of 19.3% relative to US$2.05 billion in July.”
A breakdown shows that foreign exchange sales to interbank, Swap transactions and SME interventions rose by 63.5 per cent, 72.3 per cent, and 42.5 per cent to US$0.28 billion, US$0.46 billion, and US$0.17 billion, respectively.
The CBN added that its “interventions at the Secondary Market Intervention Sales (SMIS) and Investors’ and Exporters’ (I&E) fell by 33.8 per cent and 14.7 per cent to US$0.52 billion and US$0.23 billion, respectively, compared with the levels in the previous month.”
What you should know
The Governor, Central Bank of Nigeria (CBN), Mr Godwin Emefele had, at the end of July Monetary Policy Committee (MPC) meeting, while briefing journalists on MPC decision, announced the stoppage of sale of foreign exchange to Bureau de Change (BDC) operators.
In the review period, the new Bank policy, which has been met with scepticism by the volatile FX market, will not award new licenses to BDCs.
The CBN will only sell forex to Deposit Money Banks (DMBs) for resale to the general public under the new regime. The CBN had directed all DMBs to set up teller points at designated branches across the country to fulfil legitimate forex requests for Personal Travel Allowance (PTA), Business Travel Allowance (BTA), tuition fees, medical payments, and SMEs transactions to ensure a smooth implementation of the new policy.
Before the stoppage of the weekly direct allocation of foreign exchange to the BDCs, the CBN was selling $20,000 each to over 5,500 BDCs per week. This amount translates to about $110 million per week and about $5.72 billion per year.
