Nigeria: CBN moves to narrow black market rates as forex crisis persists

Feb 20, 2017

This resolution was made to address dollar shortages at the official markets.

As forex crisis continues in Nigeria, the Central Bank of Nigeria (CBN) has resolved to narrow the growth of black market rates by boosting dollar sales for the purposes of international school payments and foreign trips. This resolution was made during a meeting between CBN and senior bankers in Lagos last Friday to discuss ways to address dollar shortages at the official markets. As part of the outcome of the meeting, the CBN will sell dollars to individuals (for foreign tuition payment and travels) at rates used by international money transfer firms- around N375-N380. Individuals will be required to present their tax certificate before buying dollars in order to reduce demand and increase tax coverage. The regulator normally sells approximately $8,000 a week
to some 3,000 licensed retail operators who account for less than 5 percent of foreign currency trading in the country. However, the CBN has charged operators to narrow the gulf between the official and parallel exchange rates. As part of measures to reduce dollar shortage, the CBN disbursed $2.83 billion to critical sectors of the economy between December 2016 and January 2017. At close of business last Friday, the naira hit a new low of 516 to the dollar on the unofficial market as the scarcity tightens. The bank urged all market players to contribute their quota to assist in getting the new measures unveiled by the CBN in place, and to ensure the steady recovery of the financial market. It also directed banks to open forex retail outlets at major airports to facilitate forex transactions for travellers.