Forex: CBN direct banks to meet school fees demand within 48-hours

In order to further increase foreign exchange liquidity in the market and ensure availability Central Bank of Nigeria (CBN) has directed banks to open teller points in all their branches so that their customers can have access to foreign exchange without any hindrance.

In a circular Ref: FMD/DIR/CIRIGEN/08/005 dated March 3, 2017 titled FOREIGN EXCHANGE DIRECTIVES OF MARCH 3, 2017.

The banks were also directed to have electronic display boards in all their branches, showing rates of all traded currencies and processes and meet the demand for personal travel allowance and basic travel allowance (PTA/BTA) by customers within 24 hours of such applications.

“Process and meet demands for school fees (including allowances) and medical bills within 48 hours of such applications.”

The circular, which was signed by Director, Financial Markets Department Dr Alvan Ikoko, warned that “non-compliance with these directives would attract sanctions, including but not limited to being barred from all future CBN foreign exchange interventions.”

Naira has been gaining against major international currencies in the foreign exchange market in recent weeks due to its decision to deepen its intervention in the market.

CBN’s spokesman, Mr Isaac Okoroafor, said that the bank is now in a better position to supply forex demands by Nigerians to meet their invisible needs like BTA, PTA and medicals.

According to him, on the first occasion, the CBN placed $500 million dollars but that only N$370 million was taken. On a second occasion, the apex bank placed $230 million and that only $221 million was taken, to demonstrate that the pressure was easing in the market.

“I want to state that what led to the appreciation of the Naira include the following:

“The CBN has done its intelligence work in the foreign exchange market and we came to the realization that much of what was driving the demand in the BDCs and the parallel market was a bubble, speculation. And we reasoned that since there was pressure on those two segments from people seeking foreign exchange for PTA (Personal Travel Allowance), medicals and tuition, that if we successfully address those needs that the pressure will come down.”

“The other issue was that the level of our reserve before now, we didn’t feel comfortable enough to do the kind of intervention that we required.”

“Now we have decided to undertake the intervention at this time because we are a bit more comfortable with the current level of our reserve. And because of that we intervened in the market and the market reacted positively and the Naira began gaining strength.”