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.