- Elumelu Hails Emefiele for Restoring Credibility to FX Market
The Chairman of United Bank for Africa, Mr. Tony Elumelu, has praised the Governor of Central Bank of Nigeria (CBN), Chief Godwin Emefiele, for restoring credibility, transparency and confidence in the foreign exchange market.
Elumelu, who is also the Chairman of Heirs Holdings said on Sunday that recent policy initiatives of the central bank under the watch of Emefiele had restored predictability, improved market confidence and significantly added a boost to the value of the national currency, fuelling optimism that the economy would soon rebound from recession.
He, therefore, urged Nigerians to cooperate with the bank as it moves to consolidate its policies which are aimed at strengthening the naira in the days ahead.
The CBN recently introduced new FX measures, which among other things, were aimed at easing the burden of travellers and to ensure that transactions are settled at much more competitive exchange rates.
The bank had also directed all commercial and deposit banks to open FX retail outlets at major airports as soon as logistics permit.
Furthermore, as part of efforts to further increase the availability of FX to all end-users; the CBN said it had decided to significantly reduce the tenor of its forward sales from the former maximum cycle of 180 days, to no more than 60 days from the date of transaction.
These initiatives as well as its steady intervention in the market saw to the significant appreciation of the naira exchange rate against the dollar, hovering around N450/$1 at the parallel market as at Sunday.
Also on Sunday, the central bank directed all commercial banks to open teller points for retail FX transactions as part of the efforts to meet the demand for foreign exchange.
The initiative is to ease access to buying and selling of the greenback in all locations as well as ensure access to FX by bank customers and other users, without any hindrance.
The central bank stated this in a circular titled: “Update to Foreign Exchange Directives” dated March 3, 2017, which was signed by its Director, Financial Markets Department, Dr. Alvan Ikoku.
In addition, the central bank directed all banks to ensure that they have electronic display boards in all their branches, showing rates of all trading currencies, adding that customers must insist on processing FX transactions based on the displayed rates.
“Banks are mandated to process and meet the demand for travel allowances (PTA/BTA) by end-users within 24 hours of such applications, as long as the end users meet basic requirements already outlined in earlier directives; and banks are mandated to process and meet demands for school fees and medical bills within 48 hours of such application,” it said in the statement.
The central bank warned that non-compliance with its directives would attract sanctions, including but not limited to being barred from all future CBN foreign exchange interventions.
These measures, according to the central bank, are also expected to further increase FX availability to all end-users and ensure that a fair and verifiable exchange rate operates in the market.
In line with its resolve to sustain the positive momentum in the FX market, the CBN at the weekend pumped additional $350 million into the market. The intervention took the total amount supplied to the market by the central bank last week alone to $570 million and was expected to further crash the value of the dollar in the coming days.
The naira traded between N450 and N460 to a dollar at some parallel market points in Lagos last Friday.
The consistent and forceful intervention by the central bank clearly brought panic among speculators who were yet to recover from the losses some of them have suffered in the last two weeks owing to the sharp and sudden appreciation of the naira, according to market sources.
Commenting on the development, the Acting Director, Corporate Communications, Isaac Okoroafor, noted that with the improving reserve levels, the central bank was determined to continuously make forex available to all genuine customers through their banks, advising those hoarding the greenback to reduce their losses by selling down their dollar stock.
Sources also spoke of the likelihood of a liquidity glut as banks were beginning to send out sales people to scout for customers to buy the dollars in an effort to avoid losses arising from the expected further appreciation of the naira.
Naira Stabilizes at N415/$1 at Official Fx Window
The Nigerian currency has continued its trend of closing at N415 per dollar, after it settled to close at that price (which it has closed at consistently since Friday) on Tuesday. This is according to data gathered from the Investors and Exporters window where the Naira is traded officially.
It seems to appear that the Naira has found its resting place at this price, considering the number of days at which it has closed at that particular price. It is now left to see how this currency will trade closer to the festive period.
However, this ‘stability’ cannot be held as a permanent thing, because for this price to be the new normal, it may have to be maintained over a longer period of time. The Central Bank of Nigeria should be making moves to bring the value of the naira back up again, to make things better for Nigerians and Nigeria especially as we approach the Christmas period.
The FMDQ group’s updates of the Spot and Forward exchange rates showed slight changes here and there, with nothing too heavy. The Spot rate did not see any changes from Monday, as it maintained the high of N405 per dollar and a low of N465.97 per dollar.
The Forward rate however witnessed a jump, with Tuesday’s high jumping back to N411 per dollar from N452 per dollar where it sat on Monday. The lowest of the Forward rate further fell to N457 per dollar from the N453 per dollar where it was on Monday.
Those who would benefit the most from Tuesday’s trading round are those who agreed on future deals at prices between N411 and N415 per dollar.
The daily turnover recorded by the FMDQ group on Tuesday sat at $152.98 million, more than $100 million less than the $256 million which Monday recorded.
On Tuesday, the parallel market saw the Naira trade at N565 per dollar. The Central Bank has however stated that it does not reckon with the parallel market.
CBN Decentralises Form A, Introduces e-Form A to Improve Invincible Transactions
In an effort to improve access to foreign exchange and facilitate invincible forex transactions, the Central Bank of Nigeria (CBN) has decentralised access to Form A by introducing an electronic version, e-Form A, for all.
The CBN disclosed this in a circular titled ‘Automation of Form ‘A’ on the Trade Monitoring System’.
The e-Form A will now replace the hard copy for all invincible transactions, PTA/BTA, medicals, education, other remittances, with effect from Tuesday, 30 November 2021.
Understanding Form A
Form A allows forex customers under the invincible category to purchase/access forex at the CBN or interbank rate to make payments for eligible services as predetermined by the Foreign exchange manual.
Therefore, Form A is a form made available by the Central Bank of Nigeria to pay for foreign exchange transactions and other remittances as stated above.
CBN has now decentralised form A to allow more people to access forex at the apex bank predetermined rate and also for proper monitoring of forex transactions, this will allow CBN better curb forex diversion to ineligible items or restricted items.
Customers are required to have a valid Bank Verification Number (BVN) and pay N5,000 as fee for e-Form A application.
Read the CBN circular “This is to inform all authorized dealers and the general public of the deployment of e-Form ‘A’.
“Accordingly, the e-Form ‘A’ shall replace the hard copy of Form ‘A’ for invincible transactions [PTA/BTA, medicals, education, other remittances etc.]with effect from November 30, 2021.
“Consequently, all authorized dealers are required to ensure that the processing of Form ’A’ shall only be done electronically on the Trade Monitoring System accessible at www.tradesystem.gov.ng.
“The general public is required to obtain a valid Bank Verification Number (BVN) from their authorized dealer Banks. The BVN is a prerequisite for customers to access the Trade System for e-Form ‘A’ application.
“The e-Form ‘A’ is web-based and allows the general public to initiate the Form from their offices/homes and submit same to the authorized dealer bank.
“A charge of N5,000 (Five Thousand Naira) as fee per declaration of e-Form ‘A’ is applicable with effect from November 30, 2021, and henceforth. There will be a direct debit from the processing bank’s current account for each declaration which should be recovered the charge on the customer by the bank. However, customers for the e-Form ‘A’ should be separated from other bank charges.”
“All hard copies of Forms ‘A’ established on or before November 2 2021 (prior to the commencement of the e-Form ‘A’) shall be utilized within 15 working days of the establishment of the Form.
“For the avoidance of doubt, all established hard copies of Forms ‘A’ for which disbursement had not been made within the transition period of 15 working days shall be deemed cancelled.
“All authority dealer banks are enjoined to inform their customers of the development for compliance.”
Naira Maintains Stability at Official Fx Window
The Naira maintained its streak on Monday, settling to close at N415.07 per dollar. This is the same price at which the Nigerian currency has closed for the last few days, according to the Investors and Exporters window where the Naira is traded officially.
While there have been very marginal differences in the opening prices over the last days, in the end the currency has come around to settle down at the same price (N415.07 per dollar) at the close of each day.
On Friday, the Naira opened at N413.71 per dollar which represented a 0.03% change from the previous day, according to the Investors and Exporters window. On Monday, the currency opened at a similar price, starting the day off at N413.75 per dollar.
Although there have been minimal changes in the opening prices, generally the currency opens at similar prices, with backgrounds of N413 per dollar and changes of only a few kobo.
While the general opening and closing prices didn’t witness much change, the same cannot be said for the Spot and Forward rates. On Friday, the Spot rate was between N404 per dollar and N444 per dollar. However, Monday saw a significant change in the Spot rate. Across all transactions that occurred on Monday, the naira reached a high of only N405 per dollar (N1 lower than Friday’s high), and went on to reach a low of N456.97 per dollar (N12 lower than the previous day).
The Forward rate – for future transactions that were agreed upon on Monday – saw a more significant change. Friday’s Forward rate high was recorded at N411 per dollar, but on Monday that fell greatly to N452 per dollar. However, Monday’s Forward rate lowest was N453 per dollar, about N2 better than the N455 per dollar at which it traded on Friday.
The total turnover of the dollar recorded on Monday sat at $256.69 million. This was considerably higher than the turnover of $215 million that was recorded on Friday.
At the parallel market on Monday, the Naira fell to close at N569 per dollar from the N560 per dollar at which it traded the previous day. After that exponential rise to about N535 per dollar, the parallel market is seeing the Naira return even closer to the N575 per dollar price at which it had sat for a while.
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