Currency speculators in Nigeria prey on exchange rate differential

Nigeria - Following the spread between the official and unofficial foreign exchange (FX) market rates which was pegged at N133.00 as of the close of business on Friday, speculators have continued to take advantage of the wide gap between the two windows even as investors scramble for US Dollars denominated investment.

However, in line with continuing close surveillance of Nigeria’s financial markets in general and the Forex Market in particular, the Central Bank of Nigeria (CBN) has warned banks to desist from all and any form of foreign exchange malpractices.

The apex bank said it is the lenders’ responsibility to not only know their customer KYC requirements but also know their customers business (KYCB) requirements.

“Given these responsibilities and in view of recent occurrences in the market, the CBN would like to remind banks to desist from all and any form of foreign exchange malpractices.

“We wish to reiterate that the operating license of any bank or banks that are found culpable with ongoing investigation would be suspended for at least one year,” it stated.

However, some deposit money banks acting on the directive of the CBN have sent notices to their customers warning that identities and Bank Verification Number (BVN) of those who contravene the apex bank’s new forex policy on overseas personal and business travels will be published.

The banks in their notices also pointed out consequences for those customers who engage in fraudulent and unethical practices with regards to the purchase of Personal Travel Allowances (PTA) and Business Travel Allowances (BTA).

Bank accounts of people involved in shady purchase of PTA/BTA may also be restricted under the crackdown.

The banks also promised to ensure an efficient, stable foreign exchange market for legitimate users.

“Customers involved in fraudulent practices such as presenting fake visas or cancelling airline tickets after receiving PTA/BTA and failing to return the funds received to the bank within two weeks will have their details published (name and BVN) on our website,” one of such notices read in part.

Meanwhile, the Naira fell further against the U.S. dollar at the black market on Friday as the currency exchanged hands with the hard currency at N545.00 per $1, data published on abokiFX.com, a website that collates the parallel market rates in Lagos showed.

This represents a N5.00 or 0.93 per cent devaluation from N540.00 it traded on Thursday.

Also, the local currency lost further against the U.S dollar at the official Nafex window on Friday.

This occurred as foreign exchange supply sharply decreased at the market session.

According to data posted on the FMDQ securities exchange window where forex is officially traded, naira closed at N412.00 per $1 at the official window on Friday.

This translates to a N0.33 or 0.08 per cent devaluation from the N411.67 it exchanged in the previous session on Thursday.

The foreign exchange turnover decreased by 22.92 per cent with $88.39 million recorded at the market session against the $114.68 million posted in the previous session on Thursday.

Naira touched an intraday high of N400.00 and a low of N413.00 at the trading session before closing at N412.00 on Friday.

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