It was learnt that the treasury departments of the DMBs
spent the entire day battling to sell their excess FX holdings. Officials
processed several foreign exchange request forms of their customers as they
sold more dollars to them.
The increase in the level of forex sale activities at the
official foreign exchange market, it was learnt, led to the rebound of the
naira at the parallel market on Thursday.
Several top bank executives, who spoke on condition of
anonymity because they were not authorised to speak on the matter, confirmed
there were huge forex transactions in the banks.
As of 6pm on Thursday, bank officials especially those of
the treasury departments, were making efforts to meet the new prudential
requirements of the regulator.
Amid its fresh moves to stabilise the nation’s volatile
exchange rate, the CBN had in a circular released on Wednesday, ordered DMBs to
sell their excess dollar stocks latest February 1, 2024. The CBN also warned
lenders against hoarding excess foreign currencies for profit.
According to officials, the central bank believes some
commercial banks hold long-term foreign exchange positions to enable them to
profit from the volatile movements of exchange rates.
The new circular introduced a set of guidelines aimed at
reducing the risks associated with these practices.
In the circular titled, “Harmonisation of Reporting
Requirements on Foreign Currency Exposures of Banks”, the CBN raised concerns
over the growing trend of banks holding large foreign currency positions.
The circular read in parts, “The Central Bank of Nigeria has
noted with concern the growth in foreign currency exposures of banks through
their Net Open Position (NOP). This has created an incentive for banks to hold
excess long foreign currency positions, which exposes banks to foreign exchange
and other risks.”
The apex bank further directed banks with current NOPs
exceeding its limits to adjust their positions and comply with the new
regulations by February 1, 2024.
The latest circular came barely 48 hours after the CBN
released a circular, warning banks and FX dealers against reporting false
exchange rates, among others.
The new development came
on the heels of the adjustment of the methodology used for the
calculation of the nation’s official exchange rate by the FMDQ Exchange, a
situation that has moved the official exchange to about N1,500 from around
N900/dollar.
Following the latest CBN directive which is aimed at
unifying the official and parallel market rates of the local unit, several
banks sold forex to their customers on Thursday.
The development led to a sharp rebound of the national
currency in the official market. Bureau De Change operators in Lagos, Kano, and
Abuja also pushed to sell their dollar holding amid fear the local unit might
sustain the gain in coming days.
Alhaji Lawan Ismael, a BDC operator in Ikeja, Lagos, said he
bought and sold the greenback for N1400/dollar and N1420/dollar, respectively.
Another BDC at the Lagos airport, Sabiu Abdullahi, said the
greenback went for between N1400/$ and N1400/$. This, he said, was a huge
rebound from over N1500/$ it sold on Wednesday.
In Abuja, the naira traded at the parallel market between
N1,300/$ and N1,350/$.
A Bureau De Change operator, Ibrahim Yahu said, “Today,
because of our small action, you could not get a standard price. Those who
bought today did so at risk. But the dollar sold between N1,300 and N1,350.”
The naira closed at N1,455.59/$ at the official window on
Wednesday, according to the FMDQ Securities Exchange. This rate has been yet to
be updated as of 09:39 pm Thursday.
Commenting on the effect of the circular, bank officials who
pleaded anonymity said they were bound to ensure their books remain within the
new FX prudential limit.
“All banks working to meet the deadline,” the chief
financial officer of a tier-2 bank told The PUNCH on Thursday evening.
Also, a top official of a tier-1 bank, while commenting on
the development, said, “After the CBN directive, we had to push out the FX.”
Another official said, “All banks are pushing out funds now,
and we are ready to sell. The key thing is profit here.”
Meanwhile, some bank officials said beyond the FX in banks,
the CBN and the security agencies would need to beam their searchlights on
politicians and government officials who are hoarding dollars in their homes.
As part of its effort to boost liquidity in the FX market,
the CBN on Wednesday issued a new circular that removes the previous cap on
exchange rates quoted by International Money Transfer Operators.
In a document titled, ‘Guidelines on International Money
Transfer Service in Nigeria,’ the CBN asked IMTOs to make payments to customers
only in Nigerian currency while using the prevailing exchange rate on the day
the transfer is received.
Abuja BDCs shutdown
On Wednesday, a source said that BDC operators would close
their shop on Thursday. The Chairman of Bureau De Change operators in the FCT,
Abdulahi Dauran, confirmed this to local media.
Dauran noted that the operators were shutting down their
operation because of the unavailability of dollars.
According to him, that has been an uptick in online business
transactions and cryptocurrency, which has been affecting their business.
Speaking on Thursday, the same source said on Wednesday, revealed that operators were set to close the market next week on
Monday due to the success recorded on Thursday.
The source said, “There is another plan in motion to close
the market next week Monday. It is going to be another crackdown so that the
price of dollar will reduce to the barest minimum.”
Meanwhile, an official at a first-generation bank told one
of our correspondents that the banks did not have enough physical foreign notes
to dispose of as directed by the CBN.
The source who is not permitted to speak to the media
claimed that the surge observed by the apex bank in its Net Open Positions were
electronic notes and not physical as insinuated by the circular.
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