CBN Moves to Boost FX Supply
By Patience Ikpeme
The Central Bank of Nigeria is taking steps to improve the country’s foreign exchange situation. They are limiting the amount of foreign currency that oil companies can send out of the country. Additionally, they’re making it mandatory for banks to handle personal and business travel allowances electronically.
These decisions were communicated through three circulars signed by Dr. Hassan Mahmud, the Director of the Trade and Exchange Department at the bank. The circulars mention that some international oil companies tend to transfer profits abroad, which affects Nigeria’s foreign exchange reserves. To address this, banks can now keep up to half of an oil company’s export earnings for 90 days.
The banks must get approval from the Central Bank before allowing these transfers and provide detailed documentation. Also, payments for personal and business travel allowances must now be made electronically, not in cash.
To prevent dishonest practices, the Central Bank has introduced the Price Verification System to monitor the prices of imports and exports. Any prices that deviate significantly from the global average will be scrutinized. However, the permissible deviation limits have been adjusted to account for global inflation.
Dr. Mahmud clarified that these measures aim to curb overpricing and other manipulative practices, not to set government tariffs. However, exceptions can be made for certain items if properly justified.
