CBN bans importation of dollars, others

The Central Bank of Nigeria, in a bid to save
the naira from foreign exchange pressure, has
banned the importation of all foreign
currencies.
The bank said, henceforth, no individual,
group of persons or investors would be
allowed to bring any type of foreign currency
into the country without its approval.
The bank disclosed this in a statement issued
in Abuja on Tuesday.
The Deputy Governor, Economic Policy, CBN,
Dr. Sarah Alade, said in the statement that the
move was aimed at saving the naira and the
economy from external threats and
dominance.
She said, “In its determination to save the
naira and the Nigerian economy from external
threats and dominance, the CBN has banned
the importation of all foreign currencies,
except with the approval of the CBN.
“The latest move is sequel to the bank’s
withdrawal of the operating licences of 20
Bureaux de Change found to have purchased
and sold huge sums of United States’ dollars
with no documentation to show details of the
transactions.”
Alade said the bank was worried about the
existence of strong foreign exchange demand
pressures from domestic sources, which were
not necessarily linked to increase in the
import of goods and services.
She said the management of the CBN also
observed the surge in dollar cash importation
by Deposit Money Banks and the huge cash
sale of the dollar to the BDCs by the DMBs.
While noting that the country currently
ranked as the largest importer of US dollars,
she said the purchase and sale of the currency
was not adequately being documented by the
BDCs.
Alade said if the trend was not contained, it
could pose grave threats to the value of the
naira as well as the Nigerian economy, which
she said had gradually become dollarised.
She said the CBN Governor, Mr. Lamido
Sanusi, and his team had decided to take an
immediate action to safeguard the naira and
ensure its stability in the face of the
aforementioned challenges.
Sanusi had on September 24, shortly after the
234th Monetary Policy Committee Meeting,
said the CBN would do everything possible to
defend the naira and ensure its stability,
including using the nation’s foreign reserves
to achieve the purpose.
He had said, “As far as the naira is concerned,
we have always said we are committed to its
stability. I have not heard any economic
argument that there is any economic value in
devaluing our currency.
“My view and that of the CBN is that if we
need to tighten money, use some of our
reserves to support the economy, we will. No
central bank governor will say he will support
the currency at all costs.
“But we want to be very clear that there is no
country that allows its currency to just be
determined by the market. We are not looking
for a stronger currency, neither are we
looking at a weaker one. People want to pay
fees and investors want to know if they will
have returns on investments.
“We will use the reserves, we will use interest
rates, we have gone through difficult months;
hopefully, the next few months will not be
difficult. We will not allow the naira to be
weakened and we are committed to that.”
Meanwhile, the Retail Dutch Auction System
will take effect on Wednesday (today),
following the suspension of the Wholesale
Dutch Auction System at the official foreign
exchange market.
The CBN said in the statement that the RDAS
would allow only customers of Deposit Money
Banks to buy foreign exchange at the CBN
through their banks as against the WDAS,
where the banks bought foreign exchange at
the central on their own accounts, which
they, in turn, sold to their customers.
The re-introduction of the RDAS is expected to
prevent round tripping of the foreign
exchange purchased at the CBN official
window to unauthorised channels.
Also, a circular has been issued mandating all
DMBs to redeem all inward money transfers in
naira to the recipients at the prevailing inter-
bank foreign exchange rate.
This, the CBN noted, was in line with
international best practice.
While condemning the action of the errant
BDCs, the CBN emphasised the continued
relevance of the BDCs in the foreign exchange
market, even as it stressed that it would
continue to support their operations in line
with the existing guidelines.
To guard against stifling the activities of the
BDCs, the CBN has authorised all banks to
deal at the official foreign exchange market
rate.
It also warned that the banks could only sell
foreign exchange to the BDCs subject to a
maximum of $250,000 per week per BDC.
The CBN also advised all BDCs to continue to
comply with the conditions of their operating
licences, including the proper rendition of
returns with respect to the purchase and sale
of foreign exchange.
The bank also assured members of the public
of its commitment to maintaining price
stability and the preservation of the value of
the naira in accordance with its mandate.