As part of efforts to ease the mounting foreign exchange challenges in the country, the Central Bank of Nigeria (CBN) will soon increase the disbursement of forex to meet demands for payment of school fees for Nigerian students abroad, medical expenses, personal and business travel allowances.
LEADERSHIP Weekend gathered yesterday that the apex bank will henceforth give weekly allocations of $1million to Deposit Money Banks (DMB) in the country, while the banks would be expected to sell to their customers at the rate of N375 per dollar.
The National Economic Council (NEC) had on Thursday at the Presidential Villa, Abuja, urged the CBN to immediately review the exchange policy.
Council members had expressed concern over the current situation of the exchange rate and called for an urgent review of the forex policy, especially the gap between inter-bank’s and the parallel market’s rates.
A reliable source in CBN told LEADERSHIP Weekend yesterday that the apex bank is currently perfecting plans to effect weekly allocations of $1million for the DMB.
In recent times, the CBN, in meeting the dollar demand of the country, particularly for sectors that are crucial to economic growth and development, had regularly sold foreign exchange at the forwards end of the interbank market to clear the backlog.
Last month, the apex bank sold $660 million in three- and five- month currency forwards at an auction. Banks were asked to bid in a special currency auction targeted at clearing backlog of dollar obligations of manufacturing, airlines, agriculture and petroleum sector.
This was the first major dollar sales to the key sector by the CBN this year in a bid to spur growth and revive the nation’s economy, which slipped into recession last year due to currency crisis necessitated by drop in global oil prices.
The CBN during the week had released the total amount of dollar allocation to customers in December last year and January this year. Together, banks in the country had sold $2.83 billion for utilization in the critical sectors of the economy such as manufacturing, agriculture, raw materials, aviation, petroleum products amongst others in line with the 60:40 foreign exchange policy.
The CBN under the new 60:40 foreign exchange policy prioritises forex sales to manufacturers, agriculture, plant and machinery, critical raw materials, among others, and requires banks to publish on a weekly basis the volume and value of foreign exchange that they sell, who they sell it to and for what purpose.
The banks, having sourced their foreign exchange from the CBN, International Oil Companies (IOCs) and other autonomous sources allocate it to their customers based on the 60:40 basis after it has been verified that the foreign exchange is not to be used for any of the 41 items that has been removed from the eligible forex list.
According to the apex bank, priority was given to manufacturing, raw material and agriculture above other demands as its disbursements are targeted at employment generating and wealth creating sectors of the economy.
Bureau de Change (BDC) operators also receive $50,000 weekly allocation from the proceeds of International Money Transfer (IMT) in an effort to reduce the pressure on the naira at the BDC end of the forex market.
While the BDCs get dollars at N381 to the dollar, they sell to customers who present their documentations at rates between N399 and N400 to the dollar.
Although allowing BDCs to access IMT forex proceeds had stabilised the price of the dollar at that end of the market, the challenge still lingers at the parallel (black) market where the value of the naira has decline to N515 to the dollar.