Sell 60% forex to manufacturers, CBN orders banks

The Central Bank of Nigeria, CBN, Monday, continued to tinker with its Foreign Exchange, forex, policy, as it ordered banks in the country to sell 60% of their forex to manufacturers.

According to the CBN order, the banks must sell 60% forex from all sources, including interbank to manufacturers, while 40% should go to other end users for the purpose of trade and other obligations.

The CBN order is contained in a circular titled “Foreign exchange sales to end users” and signed by Acting Director, Trade and Exchange Department, W.D. Gotring.

The circular states: “Following the review of the returns on the disbursement of foreign exchange to end users, it has been observed that negligible proportion of foreign exchange sales are being channelled towards the importation of raw materials for the manufacturing sector.

Read also: CBN cash mop up pushes interbank rates higher

“Against this background and in order to address the observed imbalance, the Authorised Dealers are hereby directed to henceforth dedicate at least 60 per cent of their total foreign exchange purchases from all sources (interbank inclusive) to end users strictly for the purposes of importation of raw materials, plant and machinery. The balance of 40 per cent should be used to meet trade obligations, visible and invisible transactions.”

The circular also directed the Authorised Dealers to continue with the publishing of weekly sales of foreign exchange to end users in the national newspapers and to render statutory returns on same to the CBN promptly.

In another circular, the CBN also frowned at practices by authorized dealers in buying and selling in what is referred to as free funds without appropriate documentation, saying it is a breach of extant regulations.

The CBN said: “Against the background, Authorised Dealers are to note that dealing in foreign exchange without appropriate documentation which includes relevant entries, blotters, physical documents and non-disclosure to the Regulatory Authorities is a breach of extant regulations.”

By Timothy Enietan-Matthews…

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