Forex Hiccups: CBN Orders Banks To Open Forex Outlets At Airports

The Central Bank of Nigeria (CBN), on Monday, directed banks to open foreign exchange retail outlets in the country’s major airports, as part of efforts to further ease the burden of travellers, while ensuring that transactions are settled at more competitive exchange rates.
This is part of the apex bank’s new policy action aimed at easing the difficulties Nigerians face in obtaining forex officially, especially those seeking Personal and Business Travel, Medical needs, and School fees, effective immediately.
A statement by Isaac Okoroafor, the CBN’s acting Director of Corporate Communications said the directive would “further increase the availability of foreign exchange to all end-users, the CBN has 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, the CBN plans to immediately start clearing all the unfilled orders in the interbank FX market, just as operators in the manufacturing sector would remain a “strong priority, (following which) we will no longer impose allocation/utilization rules on commercial banks.”
The statement also assured of the implementation of “an effective intervention programme to support the inter-bank market to ensure adequate liquidity necessary to deliver an efficient FX market,” besides advising “FMDQ to activate its FX Order-Book systems as soon as possible and also accelerate the on-boarding of FX clients on the FX Relationship Systems to ensure total transparency of the FX market.”
The statement warned that the apex bank would neither tolerate unscrupulous actions nor hesitate to bring serious sanctions on offenders, whether banks or their staff, urging “market operators to assist in ensuring that these new measures engender the preservation of our external reserves, stability of our financial system, and growth of our economy to the benefit of all Nigerians.”
Also, the statement said “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,” having cleared the historic backlog of matured letters of credit at the inception of the current flexible exchange rate system.
The banks are to receive amounts commensurate with their demand per week for sale to customers who meet usual basic documentary requirements, while needs of parents, guardians and sponsors seeking to make payments of school and educational fees for school and medical fees “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.”

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