CBN activates new rate by pumping $185m into FX market

The Central Bank of Nigeria (CBN) has activated the new foreign exchange rate for invisibles by pumping a total of $185 million into the foreign exchange market.

On Monday, the CBN introduced a cheaper rate for the dollar at the interbank market, requesting that banks sell the US currency at N360 for those seeking it for school fees, medical bills and travel allowances.

To activate this directive, the CBN pumped the sum of $85 million into the Deposit Money Banks (DMBs) at the rate of N357/$1 for onward sale to retail end-users at not more than N360/$1, for invisibles such as basic travel allowance (BTAs), medicals, school fees.

The apex bank also offered the sum of $100 million to authorized forex dealers in the interbank wholesale window to meet the requests of genuine wholesale customers.

Isaac Okorafor, the bank’s acting director in charge of corporate communications, said the rates in the interbank window for wholesale transactions would still be determined by activities in the interbank market.

He disclosed that all banks had also been directed to immediately post the new N360/$1 rate on electronic display boards in the banking halls of their branches, adding that examiners from the CBN would visit banks to ensure the new rates are implemented.

The CBN spokesmen also reiterated the bank’s directive to all banks to process and meet the demand for Travel Allowances (PTA/BTA) by end-users within 24 hours of such application, while applications for school fees and medical bills are to be met within 48 hours of such application.

Okorafor warned that the new move, aimed at further easing access of genuine end-users to forex, prohibited banks from selling foreign exchange funds meant for invisibles to Bureau De Change.

Going forward, he reiterated that all banks would receive amounts commensurate with their demand per week, which would be sold to customers who meet usual basic documentary requirements.

He therefore urged customers to report any erring bank to the CBN for investigation and appropriate sanction.