The Naira Strengthens As Bank CEOs Pledge Support For The CBN’s New Foreign Exchange Policy

On the parallel market on Thursday, the naira strengthened to N520 per dollar, higher than the previous day’s close of N525 per dollar. Chief Executive Officers (CEOs) of banks pledged to support the Central Bank of Nigeria’s (CBN) new foreign exchange (FX) measures and the regulator’s efforts to achieve FX stability.

The naira closed at N411.67 to the dollar on the Investors and Exporters (I & E) FX window yesterday.

The CBN also announced that it will begin refunding capital deposits and licensing costs to Bureau De Change (BDC) promoters who had outstanding license applications prior to Tuesday’s announcement of the cessation of FX sales to currency dealers.

The apex bank reaffirmed that the ban on FX sales to BDCs will not be lifted. Dr. Hassan Mahmud, Director of the CBN’s Monetary Policy Department, stated this yesterday.

Meanwhile, Aminu Gwadabe, President of the Association of Bureaux De Change Operators of Nigeria (ABCON), reacted to the CBN’s policy statement yesterday. Gwadabe stated that the association would work with the banking sector regulator to address and rectify the concerns that led to the prohibition on selling foreign currency to its members.

While briefing journalists at the end of a two-day meeting of the Monetary Policy Committee (MPC) in Abuja on Tuesday, CBN Governor Godwin Emefiele announced the halt of FX sales to BDCs. He ordered all commercial banks to set up authorized branches for the sale and disposal of foreign currency to eligible customers for legitimate purposes as soon as possible. He also stated that the CBN will no longer process or issue new BDC licenses in the country and that all licenses already under consideration, regardless of stage, have been suspended.

The CBN governor stated that weekly FX allocations, which were previously reserved for BDCs, will henceforth be channeled to commercial banks.

Chairman of the Body of Bank CEOs, Herbert Wigwe, said yesterday during a virtual media briefing that licensed financial institutions in the FX market would ensure complete compliance with the CBN directives in order to ensure FX stability. Customers might come into their banks and buy dollars for lawful transactions, according to Wigwe. The banks had agreed that the process would begin immediately after a meeting with the CBN, he said.

Wigwe, who is also the Group Managing Director of Access Bank Plc, stated that the banks are ready to fulfill the CBN’s mandate and that they have more than enough ability to do so. To avoid abuse, he stressed that the procedure will be centralized.

“We will also be doing verification of the Bank Verification Number (BVN),” said the Access Bank GMD, promising that the banks would ensure that the procedures put in place were not disrupted or exploited.

Furthermore, Wigwe stated that banks that fail to comply with the regulator’s directive to establish a forex desk will be sanctioned.

“The banking industry is willing and ready to carry out this function,” he says. As you are aware, the bank has very strong Know Your Customer compliance processes in place (KYC). We at Access Bank will make certain that all of our locations meet the criteria.

“If you look at all the banks, you’ll agree with me that they have more than enough capacity to handle the CBN’s mandate.

We shall notify the CBN and law enforcement officials if we discover non-compliance issues. So if people plan to do things like bringing a second passport and other things, we’ll report them to the authorities.”

“We believe what the CBN has done is commendable because people will have access to various channels to collect their BTAs and school fees for their children,” he added.

The banks have a lot more avenues to help people receive forex regardless of where they are, whether they are in Enugu or Port Harcourt.”

In his remarks, Guaranty Trust Bank’s Chief Executive Officer, Segun Agbaje, indicated the bank’s willingness to begin implementing the CBN’s mandate. Customers were assured by Agbaje that the banks had the resources to pay the process, which he said would begin immediately.

He also mentioned that different banks had different methods, so banks should look at their controls and see what worked for them.

“There is a lot of abuse around FX,” Agbaje explained, “so you’ll find out that some of the better-controlled systems are centralized, while others are decentralized.” Customers need not be concerned; forex will be available, and banks will conduct business in a transparent manner.”

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