Nigeria’s currency weakened further in value on Thursday by N3, exchanging at N480 with the dollar compared to N477 traded on Wednesday on the black market.
The continued pressure on the naira was attributed to speculative activities as individual are buying and storing the greenback. The foreign exchange market has been under pressure since March 2020 following a sharp drop in oil prices as a result of Covid-19 pandemic.
At the Bureau De Change (BDC) segment, naira also depreciated by N2 as the dollar sold for N477 as against N475 sold on Wednesday.
Over 5,000 BDCs operators who funded their accounts on Wednesday received allocation from the Central Bank of Nigeria (CBN) on Thursday.
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Responding to a question on what the CBN can do to stop naira depreciation, Aminu Gwadabe, president, Association of Bureau De Change Operators of Nigeria (ABCON) said there should be enforcement of compliance of all dealers and retailers in foreign exchange market to extant regulations.
He also said there should be increased security surveillance of the nation’s boarders, deepening Diaspora remittances, increased liquidity ratios of banks, sanctioning errant operators, and tighter regulations on cash deposit in domiciliary accounts.
The CBN on Thursday amended the third party forex purchase directive by changing the provision of “ultimate supply of products” to mean “the direct party selling the goods to the importer irrespective of whether the party involved is the manufacturer or internationally recognised buying company/supplier/agent.
This implies that companies whose forex payments are routed through a buying company, agent, or other third parties can open For M based on conditions set by the regulator.
“where it is unavoidable that an importer chooses to use a buying company (other than the primary manufacturer), the importer shall make available detailed Know-Your-Customer (KYC) and profile of the buying company; three-year audited financial statement of the buying company; letter of reference from the buying company’s banker stating relationship and capacity; among other documents for its approval before opening Form M,” the circular released on Thursday and signed by Ozoemena Nnaji, director, director, trade and exchange department, said.
The circular stated that “ultimate supplier of products,” should be the same as the beneficiary on the Form “M”, invoice, bill of exchange, letter of credit instrument and any other relevant document to the transaction.
The CBN on August 24, 2020, directed all authorised dealers to desist from opening of Forms M whose payment are routed through a buying company/agent or any other third parties.
