Key Takeaways
- CBN stops selling Forex to Exchange Bureaus
- BDC merchants condemned of fueling market activity
- CBN orders banks to sell forex to customers
Mr. Emefiele explained that the measure aims to protect the national currency, the naira, under pressure and to keep currency reserves, which are currently melting.
"Operators in this sector of the market will now have to obtain foreign currency from independent sources," "Commercial banks will be allowed to accept currency deposits in cash from their customers," the governor said. he added.
Some of the other shortcomings that CBN has noticed are the enormous commissions of operators interested in high profits, the dollarization of the Nigerian economy, and the subversion of CBN's cashless policy.
Furthermore, the apex bank chief also noted that BDCs had employed unfair practices to obtain forex, and some were involved in illegal foreign exchange business with international organizations.
Nigeria - Africa’s largest economy and biggest crude oil producer has been hit by the collapse of oil prices since mid-2014. Oil sales constitute 90% of the income of this country which is denominated in foreign currencies.
As the price of a barrel plunged below $40, foreign exchange earnings fell by $1 billion per month, Emefiele said. At the same time, demand for foreign currency has increased due to the country being a major importer of goods. This trend coupled with rising inflation and slow economic growth has gradually reduced the country’s foreign reserves.
Do you think the CBN made the right choice by shutting out foreign exchange to bureaus.
