Although queues resurfaced in most banking halls nationwide, specifically at the forex section, banks were able to meet demands of customers requesting foreign exchange for business and personal travel allowances as well as school and medical bills, among others, LEADERSHIP Sunday learnt.
Our correspondents who went round some banks at Ikeja, Alimosho, Lagos Island and Ikorodu road, among other areas of Lagos earlier in the week, noticed queues in some of the banking halls. Their enquiry revealed that the queues were as a result of increased demand for forex through banks.
The Central Bank of Nigeria.(CBN) had, last week, directed banks to create special desks to attend to customers requesting foreign exchange after it stopped selling forex to Bureau De Change operators.
While this caused the value of the naira to plummet initially, it has begun to firm up as banks began to meet demands.
Following the directive, bank chief executives had given assurances that they are capable and ready to meet foreign exchange demand.
According to the managing director/CEO of Access Bank, Herbert Wigwe, who also doubles as the chairman of the Bank CEOs, commercial banks in the country have the capacity and are ready to meet the legitimate demands for forex, including those which BDC operators used to handle.
“Nigerian banks will be able to meet this requirement. This was being done by the BDCs before and there were 5,000 of them, and if you look at the branches that all the banks bring to bear across the country, the banks have more than enough capacity to deal with it,” he said.
Consequently, commercial banks had sent out emails and adverts urging customers to approach their branches to request foreign exchange. This, the bank CEOs said, is in compliance with the CBN circular to banks asking them to create dedicated desks to service forex demand.
To this end, some customers told LEADERSHIP Sunday that asides the queue and process that they had to face and the documentations they had to provide, there was no hitch in accessing the foreign exchange.
Currency traders who equally spoke with LEADERSHIP Sunday said the availability of forex in the banking halls may be responsible for the appreciation in the value of the naira as some of their travelling customers have been using the banking halls.
The naira which had crashed to N525 to the dollar last week has begun firming up as speculators who had bought the dollar at that price are beginning to count their losses. The value of the naira has continued to sustain its appreciation. Yesterday, the naira closed at N510 to the dollar on the parallel market.
Having declined to its lowest level this year, the value of the naira began to pick up last weekend as it closed on Saturday at N517 to the dollar. It further firmed up as business activities commenced this week to N512 before closing at N506 yesterday.
Traders at the black market told our correspondent that the demand for the green back had slowed and those willing to buy are pricing it lower. A currency trader at the parallel market in Lagos said some of his colleagues had bought at N515 and hoarded it hoping that the value would further depreciate to N550 but they had been disappointed.
At the Nigeria Autonomous Foreign Exchange (NAFEX) market, the value of the naira had depreciated slightly from N411.44, which it closed last week Friday, to N411.50 as at the close of business yesterday.
Analysts say as long as the banks are able to meet the demand which used to go to the BDC segment of the market, the rates would remain stable.
The managing director, Financial Derivatives Nigeria Limited, Mr. Bismarck Rewane said: “What happened in the past was that these guys (BDCs) were selling foreign exchange principally to people traveling out of the country and buying from tourists coming into the country, but along the line they derailed.
“This has become a source of concern to the regulators and rightly so. What happened was that these guys will buy the dollar at N400 and an hour later sell it at N500. So, in 2000, we had 74 BDC operators. By 2010, it had increased 27-fold. In other words, we had 2000 operators from 74. By 2020, the figure had gone up to 5000.”
In the last quarter, he said, the federal government, through the CBN, spent more on travel to the tune of $472 million, which is higher than the debt service put at $172 million, as he stressed that “no country in the world can survive that kind of haemorrhage. So, that was why the CBN had to take steps.”
He added that “there is need for administrative control, but the problem is that, the moment you stop things administratively, you now create a certain black-market premium. People are going to be inconvenienced. But now, the CBN says go to the bank. I agree with the CBN governor, but you and I know that walking into a bank and coming out in five minutes is something else. It’s easier to put 60 flies in a matchbox than to go into a bank and come out in five minutes.”
He called for close monitoring of the situation, recommending that the CBN should encourage everyone to go to the bank but it should sell to bureau de change at the parallel market rate by five per cent.
“If the parallel market is N500, you can sell to the bureau de change at N490. The N10 margin is way lower than the N100 margin,” he said.
The efforts of the apex bank to instil discipline in the foreign exchange market, he said, will be counterproductive unless a market solution is put in place.
FOREX: Ethnic Youth Leaders Back CBN Ban Of BDCs(Opens in a new browser tab)