http://www.thisdaylive.com/articles/naira-rebounds-in-parallel-market-as-banks-reject-dollar-deposits/216163/


Naira Rebounds in Parallel Market as Banks Reject Dollar Deposits

31 Jul 2015

Obinna Chima


The naira, which had fallen sharply in the parallel market,
staged a major recovery thursday, as it appreciated to a
band of N225 to N230 to a dollar, compared to N240 to the
dollar at which it sold in the last few weeks.
Forex dealers attributed the naira’s gain to excess supply of
the greenback in the market, even as it looked like a lot of
speculators would lose their shirts.
THISDAY gathered from a reliable source that commercial
banks that presently have dollars in excess of $1 billion in
their vaults have started taking desperate measures to
mitigate currency risk.
In fact, the source, a bureau de change (BDC) operator,
disclosed that banks have stopped accepting dollars
because they have too much cash in their vaults.
According to the source, as a result of the development,
banks have been rejecting dollar deposits into domiciliary
accounts, but customers are allowed to withdraw cash from
their accounts.
“The reason the banks have too much cash is due to
speculation and money laundering. A lot of people have
been speculating against the naira and amassed so much
cash. Then there are those who have been amassing
dollars obtained illicitly and want to launder the money,
“So bank vaults are awash with dollars, largely driven by
speculation and money laundering. The banks made it very
clear that they want to get rid of the dollars in the system,
so if you want to withdraw you can, but you cannot pay in
dollars into your domiciliary account,” the source explained.
Confirming the development, an official of the Central Bank
of Nigeria (CBN) said the banks even offered the dollars to
the central bank and sought its assistance to help them to
wire the funds overseas, which the CBN rejected.
Following the rejection, the banks were left with no option
than to stop accepting dollar deposits from customers,
hence the sharp depreciation of the dollar to the naira in the
informal forex market.
“By the time CBN refused to wire the cash abroad, the banks
led by Stanbic IBTC stopped accepting cash from their
customers. Stanbic IBTC sent an email two days ago to its
customers that it would not accept dollar deposits for the
time being and this was followed by ten other banks,” he
divulged.
He said the situation was compounded by CBN’s insistence
that BDCs obtain the Bank Verification Numbers (BVNs) of
their customers before transacting any business with them.
“The central bank introduced this measure so that it can
track the wire transfer BDCs carry out on behalf of their
customers. That way, a money trail can be established to
ensure that the funds being wired out are for legitimate
transactions and not illicit transfers.
“Another option available to the CBN is to give BDCs
prepaid debit cards in denominations of $1,000 instead of
selling them cash so that these cards could be used for
legitimate transactions that are traceable,” the official
explained.
Also, an analyst at Ecobank Nigeria, Mr. Kunle Ezun, who
spoke to THISDAY, attributed the naira’s surge to the
directive by the central bank that all licensed BDCs in the
country must provide the BVNs of their customers for all
transactions.
“I have been watching the market in the past few days and
since last week’s directive by the central bank for the
inclusion of BVNs as one of the requirements for accessing
the interbank market, the naira has been appreciating.
“As the enforcement of the BVN commences next week, I
think we would see more transparency in that market. I
have always said that what is driving the parallel market is
speculation and that is what the CBN has always said.
“So once the BDCs start complying with the BVN
requirement, we might see the naira appreciate further in
the parallel market,” Ezun said in a phone chat with
THISDAY last night.
The CBN about a fortnight ago also directed the BDCs to
provide the BVN of all their directors before August 15, as
failure may affect their continued participation in the forex
market.
It also directed that information on all transactions by
customers be included in the BDC returns to the CBN. It
added that for corporate customers, the BVN of a director or
an authorised signatory of the entity must be provided.
The CBN said the move was to ensure greater transparency
in the transactions of licensed BDCs in the country.

Hmmm....Interesting

This is a good news. I hope naira appreciate further.

God bless Jonathan,

The BVN exercise project is a laudable exercise initiated by his administration.

With this news as explained here it means that hodders are in real trouble if they don't hurriedly sell off their dollars because the naira will continue to appreciate and Nigeria being who they are with so much greed may lose much money if they continued the nodding.

Bugatie:
God bless Jonathan,

The BVN exercise project is a laudable exercise initiated by his administration.

it makes life easy for the CBN and efcc

saintopus:
With this news as explained here it means that hodders are in real trouble if they don't hurriedly sell off their dollars because the naira will continue to appreciate and Nigeria being who they are with so much greed may lose much money if they continued the nodding.

not as strait forward as you think!

I should quickly run to bureau de change tomorrow to buy dollars.

FriedPlantain:
It is people like you that are contributing immensely to the current plunging of the naira.

Abeg go and continue frying ur plantain jare. u sabi wetin I wan take dollar do? Mr bebeto. I no know who call u.

saintopus:
Nigeria being who they are with so much greed may lose much money if they continued the nodding.

Abi o
let them kontinu o
Na headache go settle the matter

Good move

But the pounds is still gaining against the naira. This shows that the appreciation against the greenback is artificial. Today I got an sms from DTI that they are doing 355 against 1 pounds while LCC and Coinstar are doing 350.
Naira will appreciate against all currency when the govt states its policy otherwise this only dollar appreciation is just a gimmick.

We don't have a finance minister!!!



Sai Buhari!

Good one...waiting for the dollar to drop further

“I have been watching the market in the past few days and
since last week’s directive by the central bank for the
inclusion of BVNs as one of the requirements for accessing
the interbank market, the naira has been appreciating."

Cc: Ishilove, lalasticlala