In a swift move to save the naira and the Nigerian economy from external threats and dominance, the Central Bank of Nigeria (CBN) has banned importation of foreign currency.
The ban, which was announced yesterday in Abuja, makes it illegal to import foreign currency into the country without the prior approval of the CBN.
Also, the apex bank is commencing the Retail Dutch Auction System (RDAS), which replaces the Wholesale Dutch Auction System (WDAS), from today.
According to the CBN, the ban on importation of foreign currency is a follow-up to the earlier withdrawal of the operating licences of 20 bureaux de change (BDCs) found to have purchased and sold huge sums of United States dollars with no documentation to show details of the transactions, a statement from the apex bank said yesterday.
CBN deputy governor, economic policy, Dr Sarah Alade, quoted in the statement, said the CBN frowned at the existence of strong foreign exchange demand pressures from domestic sources, which are not necessarily linked to increase in the import of goods and services. According to Alade, the CBN has observed the surge in United States dollar (USD) cash importation by deposit money banks (DMBs) and the huge cash sale of the US dollars to BDCs by the banks.
While noting that Nigeria currently ranks as the largest importer of United States dollars, she disclosed that the purchase and sale of the cash is not adequately documented by the BDCs.
She 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 dollarized.
Alade said the governor, Sanusi, and his team decided to take immediate action to safeguard the naira and ensure its stability in the face of the aforementioned challenges.
Meanwhile, the RDAS takes effect today, Wednesday, October 2, 2013, following the suspension of the WDAS at the official foreign exchange market.
The statement from the CBN disclosed that the RDAS will allow only customers of deposit money banks to buy foreign exchange at the CBN through their banks as against the WDAS where the deposit money banks bought foreign exchange at the CBN on their own accounts and in turn sold to their customers.
The re-introduction of the RDAS is expected to prevent round-tripping of foreign exchange purchased at the CBN official window to unauthorised channels.
Also, a circular has been issued mandating all deposit money banks to redeem all inward money transfers in naira to the recipients at the prevailing inter-bank foreign exchange rate. This is in line with best practice.
While condemning the action of erring 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 authorized all deposit money banks to deal at the official foreign exchange market rate. It also warned that the banks can only sell foreign exchange cash to 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 purchases and sales of foreign exchange.
Meanwhile, the apex bank has 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.