Naira gains at black market

…As CBN’s new FX rule begins

The naira on Monday recorded gains on the parallel market, also called the black market as the new foreign exchange (FX) rule by the Central Bank of Nigeria (CBN) commenced on Monday, July 1.

On the black market, the naira gained 0.66 percent as the dollar was quoted at N1,510 compared to N1,520 quoted on Friday, data collated from street traders and some online data collating platforms indicated.

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One of the traders said the gain was due to a moderation in demand for dollars by the end users amid improved supply. However, he was not sure of the sustainability of the gains.

The CBN last Wednesday announced the discontinuation of its Price Verification System (PVS) Portal, effective July 1, 2024. This decision comes in light of recent developments in the Nigerian foreign exchange market.

The announcement was made through a circular issued by W.J. Kanya, acting director of the trade & exchange department, referencing the previous circular dated August 17, 2023, titled “Go-Live of the Central Bank of Nigeria Price Verification System Portal”.

The price verification system portal was an online platform introduced by the CBN to ensure that the prices of goods and services for foreign exchange transactions were accurately verified. It aimed to prevent over-invoicing and under-invoicing, thus ensuring fair pricing in Nigeria’s import and export activities.

With this new directive, all applications for Form ‘M’ will now be validated without the need for a price verification report generated from the PVS portal. The circular explicitly states that the price verification report is no longer a requirement for completing a Form ‘M’.

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This policy change aims to streamline processes for authorised dealer banks and the general public, potentially easing the procedural burden associated with foreign exchange transactions.

Stakeholders in the banking and finance sectors are advised to note these changes and adjust their procedures accordingly. Further guidance and updates from the central bank are anticipated as the new system takes effect.