7/13/ · The CBN in asked banks to suspend processing importation of milk on a credit basis following its decision to prohibit forex dairy products as part of government’s protectionist agenda to Estimated Reading Time: 1 min 5/26/ · By Collins Nweze. The Central Bank of Nigeria has continued to fund bureaux de change (BDCs) segment of the foreign exchange market weekly to keep the naira stable. President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said dollar sales to BDCs still at N to dollar. He said the CBN is committed to improving 2/27/ · Apart from the complaints addressed above, it would also appear that the CBN is breaking the law in (i) the sale of forex to BDCs, and (ii) permitting BDCs to sell forex to members of the public
The New Requirements for BDCs from Central Bank
One of the complaints is the directive by the CBN to commercial banks to allocate 60 per cent of their forex sales to the manufacturing sector and at the rate advised by the CBN. The second major complaint is that the CBN has refused to allow a complete float of the exchange rate, by dictating to the banks and bureau de change BDC operators the rates at which they may deal.
As far as the Foreign Exchange Monitoring and Miscellaneous Provisions Act Foreign Exchange Act or the Act has enacted, there is only one lawful market for the conduct of forex business in Nigeria, namely the authorised foreign exchange market Afem ; and in which transactions cbn takes banks bdcs head-on over new forex rules to be conducted in accordance with the provisions of the Act see s.
The Act also warns that nothing therein shall be construed as permitting any unrestrained or general dealing in forex on terms inconsistent with its provisions see s. Section 7 of the Act further enacts the parties that may conduct transactions in that market.
Also, the fact that transactions as between different participants in the Afem may be conducted at different rates does not mean the existence of more than one lawful market for the conduct of forex transactions in Nigeria. Indeed, s. And this takes me back to the two complaints against the CBN.
If, as indeed is unarguable, Section 9 of the Act permits parties to an exchange transaction to determine the rates at which they would execute their transactions, then the CBN is entitled to determine the rates at which it would sell the forex that it brings into the market The CBN also has power under the CBN Act to sell and purchase forex; and it may be that this power exists independently of its right to participate in the Afem under the Foreign Exchange Act.
And given that the CBN is an agency of the government, the independence of the CBN does not preclude it from acting in a manner that would promote the economic policies of the government, including promoting any sector of the economy by preferential forex allocation.
This is more so in a context in which there is an acute shortage of forex, and other local exigencies exist, for which it may be argued that the undirected hands of the market market forces cannot be trusted to allocate this scarce resource appropriately. However, the CBN should not extend this directive to cover forex that it has not brought into the market.
For the avoidance of doubt, s. And we had thought that in its subsequent policy change, which occurred in June that year, the CBN had abandoned the path of unlawfulness. As a government committed to the rule cbn takes banks bdcs head-on over new forex rules law, the Honourable Attorney General of the Federation would do well to advise the CBN to desist from this breach of the Foreign Exchange Act, which is also causing distortions in the Afem. If this is done, foreign investors and other lawful forex earners would bring in their forex through the banks as provided by the Act and exchange it for the Naira at rates agreed with the banks.
What this means also is that at the time of repatriation of capital or earning on the investment, the foreign investor will also go the bank and they will agree a mutually acceptable rate: and in this case, the foreign investor cannot be heard to say that the CBN has not provided enough forex to enable it to repatriate its capital or earning, because the CBN did not intervene in any way at the time it brought in the investment into Nigeria. This would also mean fewer headaches for the CBN.
But it also does not mean that the CBN may not provide additional forex liquidity to the Afem subject to availability and as may be appropriate from time to time, cbn takes banks bdcs head-on over new forex rules.
Apart from the complaints addressed above, it would also appear that the CBN is breaking the law in i the sale of forex to BDCs, cbn takes banks bdcs head-on over new forex rules, and ii permitting BDCs to sell forex to members of the public. And this is another major source or cause of distortion in the market. This is because the Naira, which is what the BDC receives from the member of public in that transaction, is not a commodity that is capable of being bought with forex in Nigeria.
However, as I said earlier, I will deal with this matter in more detail in a subsequent article. To enable commenting and other interactive features, please switch to the more advanced.
By Nduka Ikeyi. US dollar. In this article: Central Bank of Nigeria.
STOPPAGE OF FOREX SALES TO BDC'S BY THE CBN IN NIGERIA:BY ANIRE BINITIE
, time: 1:39abokiFX News | Forex Updates
2/27/ · Apart from the complaints addressed above, it would also appear that the CBN is breaking the law in (i) the sale of forex to BDCs, and (ii) permitting BDCs to sell forex to members of the public 7/13/ · The CBN in asked banks to suspend processing importation of milk on a credit basis following its decision to prohibit forex dairy products as part of government’s protectionist agenda to Estimated Reading Time: 1 min 7/2/ · The letter, signed by association’s President, Alhaji Aminu Gwadabe, and Executive Secretary, Uduma Cletus, advised the CBN to increase its weekly forex sale to the BDCs from $30, to $50,
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