CBN denies allocating forex directly with customers

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The Central Bank of Nigeria, CBN, said on Sunday that contrary to speculations, it was not dealing directly with deposit money bank customers who seek foreign exchange allocations for their businesses. The bank said it was not be involved in any activity capable of discrediting the FOREX market.

There have reports of irregularities in the rates at which some individuals and companies obtained foreign exchange from different banks under the new 60:40 ratio allocation policy.

Reports have made the rounds for a while about multiple FOREX exchange rates in the economy.

Some of these rates include those for preparing the annual national budget, parallel market and black market rates; rates by airlines for selling flight tickets, fuel imports rates and rates for customers going on pilgrimage.

But, the CBN governor, Godwin Emefiele, said the CBN was not aware of any other rate in the allocation of FOREX apart from the existing inter-bank market rates, which operate within an approved range.

“Budget rate used in preparing the annual budget is a forecast rate, which has always been there from history. Like the name implies, it is a tentative forecast rate,” he explained.

On the parallel and black market rates, Mr. Emefiele said both were the same, while the so-called pilgrims rate was already agreed prior to the introduction of the new exchange rate policy last year, which could not be changed. “Sometimes in March 2016, the pilgrims, both Christians and Moslems, approached the CBN for allocation of FOREX. That time the market rate was N197 to the dollar. They had started making full payments at that rate in advance of their pilgrimage in July/August. The CBN could not have expected them to pay for FOREX at the new rate of N385 to the dollar, because the rate had move with the new exchange rate policy. Asking them to pay at the new rate would have amounted to an unfair business practice, just as if the rate had gone down,” he said.

During the Monetary Policy Committee meeting last week, Mr. Emefiele rejected accusations of irregularities under the policy, saying under the new 60:40 policy, banks were directed to ensure that a minimum of 60 per cent of the total FOREX provision for the economy was sold to some sectors and activities, like manufacturing, agriculture, plant and machinery, critical raw materials, among others, capable of generating jobs.

Although he noted the challenges some of the small businesses were still facing with their banks as a result of the requirement for them to provide unconfirmed letters of credit for imports and their capacity to fund their accounts, Mr. Emefiele said the CBN was doing everything within its capacity to facilitate easy transactions.

However, spokesperson of the bank, Isaac Okorafor clarified further on Sunday that alleged irregularities in rates were not well founded, as the CBN neither handles allocation of FOREX nor deal directly with bank customers.

“The CBN does not fix FOREX rates for transactions by individuals or companies,” Mr. Okorafor said.

He said in line with CBN’s principle of transparency, DMBs were directed to forward evidence of their FOREX sale to end users and advertise same in national dailies.

Since the introduction of the new FOREX floating exchange rate policy in 2016, the CBN had been publishing every month evidence of the sale from DMBs, as received from them.

Mr. Okorafor said were some of the banks were recently observed to have forwarded inaccurate data of such sales, which erroneously created a wrong impression of disparate rates, the basis for which allegations of irregularities were made, those affected were queried.

“Some of the DMBs queried for providing inaccurate data have returned a response indicating that some of the figures were related to formatting errors, which do not affect the true rates of the affected transactions,” the CBN spokesperson said.

He said as the constitutionally authorized industry regulator mandated to manage the FOREX market, maintain external reserves and to safeguard the international value of the legal tender currency, the CBN has a duty to not to indulge in acts capable of discrediting the FOREX market.

While reiterating its commitment to the most transparent sale of FOREX under the new policy, he said the CBN had no intention to benefit any individual or corporate body in any way through the policy.