The federal government acting through the Central Bank of Nigeria CBN has banned the wholesome importation of foreign currencies into the country. The Deputy Governor of the apex Bank in charge of Economic Policy, Dr Sarah Alade, said in Abuja that the measure was in line with the bank’s determination to save the local currency the naira and the Nigerian economy from external threats and dominance.
The dollarisation of the Nigerian economy and a heightened money laundering challenges were some of the key issues last week’s Monetary Policy Committee meeting singled out for immediate actions. According to Dr. Alade, the movements of currencies in excess of $5, 000 either out of or into the country must be declared or approved by the Central Bank.
Only last week, CBN withdrew the operating license of 20 Bureaux de Change, BDCs, found to have purchased and sold huge sums of United States dollars with no documentation to show details of the transactions. Dr. Alade reiterated the position of the Governor of the CBN, Mallam Sanusi Lamido Sanusi, after the MPC that “the Management of the CBN frowned at the existence of strong foreign exchange demand pressures from domestic sources, which are not necessarily linked to increase in the import of goods and services. She said that the management also observed the surge in United States Dollar cash importation by Deposit Money Banks, DMBs, and the huge cash sale of the US dollars to BDCs by the DMBs.
While noting that Nigeria currently ranks as the largest importer of United States dollars, she disclosed that the purchase and sale of the cash is not adequately documented by the BDCs. Meanwhile, the Retail Dutch Auction System, RDAS, will commence Wednesday, following the suspension of the Wholesale Dutch Auction System, WDAS, at the official foreign exchange market. RDAS will allow only customers of deposit money banks to buy foreign exchange at the CBN through their banks as against the WDAS where the deposit money banks bought foreign exchange at the CBN on their own accounts and in turn sold to their customers.
CBN said the re-introduction of the RDAS is expected to prevent round tripping of foreign exchange purchased at the CBN official window to unauthorised channels.
The Apex bank has also issued a circular mandating all deposit money banks to redeem all inward money transfers in naira to the recipients at the prevailing inter-bank foreign exchange rate.
While condemning the action of erring BDCs, the CBN emphasised the continued relevance of the BDCs in the foreign exchange market, even as it stressed that it would continue to support their operations in line with the existing guidelines. To guard against stifling the activities of the BDCs, the CBN has authorised all deposit money banks to deal at the official foreign exchange market rate. It also warned that the banks can only sell foreign exchange cash to BDCs subject to a maximum of $250,000 per week per BDC.
