Banks ignore CBN directives on Forex

There are indications that banks are ignoring the Central Bank of Nigeria, CBN, directive that they should grant their customers unfettered withdrawal of foreign currencies from domiciliary accounts.

Meanwhile, Nigeria’s foreign exchange market has recorded a drastic change following the market reforms introduced by the CBN, previous week.

Findings show that the banks are still restricting the amount of foreign currency that customers can withdraw from their accounts saying the currencies are still scarce.

Dealers and the customers who spoke to Financial Vanguard lamented that the situation has impeded supply of foreign currency to the market.

But the drastic change in both structure and operations of the foreign exchange market, according to the Financial Vanguard findings has resulted in exchange rate convergence by default as the US dollar traded within narrow band across the three segments of the market, namely, the Investors and Exporters (I&E) window, the Bureau De Changes (BDCs) and the black market.

However, for the first time, the exchange rate in the official market (I&E) surpassed what obtained in the black market.

Meanwhile, dealers across all the segments are facing acute scarcity of the US dollars while CBN resumed supply of the foreign currency last week, though at a very low volume.

Findings show that Naira last week depreciated further to N770.17 per dollar in the I&E window, with currency dealers projecting further deterioration of the dollar scarcity, a situation which may propel further depreciation of the local currency this week.

According to data from FMDQ, the I&E window exchange rate closed at N770.17 per dollar on Friday. This represents 16.2 per cent week-on-week, WoW, depreciation of the Naira when compared with the closing rate of N663.04 per dollar the previous week.

The Naira also depreciated in the parallel market, where the dollar traded within the range of N765 and N770 per dollar, at the close of business, up from N759 per dollar the previous week.

The Naira has been on the downward trend in both the official market and parallel market, since the Central Bank of Nigeria, CBN announced, “Operational Changes to the Foreign Exchange Market,” including elimination of multiple exchange rates/segments and re-introduction of willing seller, willing buyer model in the I&E window.

Since the changes were announced the previous week, the Naira has depreciated by 63 per cent in the I&E window, from N471.67 per dollar on Tuesday June 13th.

During the same period, the Naira also depreciated by 20 per cent in the parallel market from N755 per dollar.