The Central Bank of Nigeria, CBN, yesterday, Monday, 20th February, 2017 issued a new forex policy on its website called the “New Policy Actions in the Foreign Exchange Market.”
The policy will dictate how things work in the Nigerian foreign exchange market. Here’s a breakdown of the policy.
- It is directed at the retail end of the market where the scarcity is worst. This is the market that used to be served by the BDC’s
- The policy aims to ensure supply of dollars for Personal and Business Travel Allowances (those who need it to travel on holiday or business), Medical needs (People who need forex to pay for medical services abroad) and School fees (People who need forex to pay for their school fees or for school fees of their wards schooling abroad). If you fall into any of these categories, you are qualified to get forex
- To ensure that these categories of people get Forex easily, CBN said it will be selling Forex to All banks every week.
- Each bank would however receive amounts commensurate with their demand per week. This means the bank that gets patronized the most from customers will get the most dollars from CBN.
- To ensure that anyone and everyone who is qualified for PTA and BTA gets it, the CBN has also directed all banks to open FX retail outlets at major airports “as soon as logistics permit.”
- As logistics permits means, banks don’t have a timeline to open outlets at various airports. This is a double-edged sword as banks with outlets could sell at a premium. The more banks available to sell, the cheaper it is to buy, that’s according to the laws of demand of supply. We know forex in Nigeria hardly meets that law.
- Major airports here refer to the three major international airports we have in Nigeria. Lagos, Abuja and Kano. With Abuja Airport set to be closed, it is likely that Kaduna airport will soon be an FX destination.
- This means, all banks without an outlet at our “major airports” will not joining the likes of Travelex, UBA, First Bank, GTB, Zenith to sell forex to consumers.