The Naira has depreciated by N42 in the parallel market since June 28, when the apex bank banned 41 items from the foreign exchange market. From N220 per dollar as at June 28, the parallel market exchange rate rose to N242 as at yesterday
Miffed by the pace of this depreciation, Vanguard investigations revealed that the CBN dispatched three of its directors to Lagos, Tuesday, to conduct market surveillance. Specifically, they were given the mandate to discuss with Bureau de Change (BDC) operators to ascertain what is causing depreciation of the Naira in the parallel market, and measures that can be deployed to address the depreciation.
Confirming this development to Vanguard, Managing Director, Sabil BDC, Alhaji Aminu Gwadabe, said the CBN team wanted to know why the Naira is depreciating even on Wednesdays when the CBN sells to BDCs.
“We told them that the reason is that the forex users know that CBN sells to BDCs on Wednesdays, hence they always position their demand against what the BDCs will get from CBN. But because what the CBN sells to us is not enough to meet the demand, the exchange rate rises further.
“We also told them that the solution is to increase the amount of forex they sell to BDCs. That is how we can narrow the N46 gap between the official rate and the parallel market exchange rate.”
This was corroborated by Managing Director, H. J. Trust BDC, Mr. Harrison Owoh, saying: “The depreciation of the Naira in the parallel market is driven by genuine demand from importers banned from the foreign exchange market. You know we cannot sell to them. They can only buy from the black market. Hence the black market is dictating the rate.
“More so, BDCs have only two sources of dollars — what we buy from CBN and from walk-in-customers. So, we don’t have supply, we also are limited in who we can sell to. So the market is determined by the black market. The solution is for the CBN to increase dollar sales to BDCs, otherwise the rate might continue to go up.”
BVN now criteria for BDC transactions
Meanwhile, the apex bank has directed that all foreign exchange transactions by bureaux de change (BDCs) must have Biometric Verification Number (BVN) of the customer, and must be included in periodic returns. It also mandated all directors of BDCs to submit their BVN latest August 15, 2015.
In a circular to BDCs, yesterday, and signed by Director, Financial Policy & Regulation Department, Mr. Kevin Amugo, the CBN stated: “This is to inform all licensed BDCs operating in Nigeria that, with effect from August 1, 2015, all transactions consummated by a BDC must have the Bank Verification Number (BVN) of the customers.
“This information must be included in the Returns to the CBN. In the case of corporate customers, the BVN of a director or an authorised signatory of the entity must be provided.
“To ensure a hitch-free implementation of this directive, the list of all licensed BDCs would be provided by the Central Bank Nigeria to the Nigerian Interbank Settlement System, NIBBS, to enable the company provide necessary hardware token that would be used by the BDC in access the NIBBS website.
“NIBBS has been directed to make a portal available on its website to facilitate access for the confirmation/validation of the BVN of the BDCs’ customers. This is to ensure that the correct BVN is recorded by the BDC and included in the returns to the CBN. ”
“A token transaction fee of N100 would be paid for each access on the portal. NIBBS will also provide the necessary training manual for an ‘easy to use’ operation of the system.
“Furthermore, all licensed BDCs are required to provide the BVN of all their directors before August 15, 2015, as failure to meet this requirement may affect their continued participation in the foreign exchange market.”
Source vanguard
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