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Challenges Of Naira ATM-Cards Forex Restriction By CBN - Business - Nairaland

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Challenges Of Naira ATM-Cards Forex Restriction By CBN by Truth234(m): 9:40am On Dec 27, 2015
I read some comments on Facebook that the reason for naira ATM cards Forex restriction is to curtail frauds. I am putting it out there now that the reason is not to curb fraudulent activities, the reason is because Deposit Money Banks (DMB) is finding it hard to off-set its forex transactions due to dollar scarcity caused by reduction in oil revenue. Since that is the most reliable means of servicing our Forex market.

My concern is if CBN is finding it hard to service banks and Bureau de change, how on earth do they expect parents to source for dollar for their kids abroad? Having it in mind that interbank Forex activities has been closed since last week Thursday and won't be opened till 4th Jan, which means both money gram and western union outbound transfers are closed till 4th Jan. Leaving Nigerians abroad to their fate.

Currently a lot of Nigerian students/travelers are struggling to pay tuition fees, oversea medical bills, etc. because banks have slashed their international card spending limit. Now the same banks are asking customers to open a dollar account for dollar-denominated transactions. How many bank accounts do average Nigerian needs to live a normal life?

Here is what will possibly happen in January, 2016, the rush/demand for dollar, will drive naira to 300 against dollar at the parallel market if CBN does not pump more Forex into the parallel market while the interbank FX market remains shut throughout the festive period.

Another issue parents will have to deal with is the increment, using bank cards oversea allow one to access Forex at bank rates, usually between 220 to 225 depending on banks but from now on, they will have to deal with parallel market where prices are driven by speculators, we are talking about 265 upward.

These are hardworking parents doing all they can to ensure our future generation turn out well but what is our government doing to help the same cause?

My question is why our government keep shifting their responsibilities to the masses but yet enjoy our taxes?

7 Likes 1 Share

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by datola: 9:51am On Dec 27, 2015
You said CBN should pump dollar into the economy. Where is the money? Our foreign reserves is dwindling by the day.

Can't we do without these foreign tastes for now?

3 Likes

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Truth234(m): 9:55am On Dec 27, 2015
datola:
You said CBN should pump dollar into the economy. Where is the money? Our place reserves is dwindling by the day.

Can't we do without these foreign tastes for now?

We can't do without it, this is because Nigeria is a petrol-dollar economy. In fact there is no economy without the two, until we diversify. The restrictions will create unnecessary scarcity that will plunge naira the more and most likely forced customers to engage in all kinds of questionable transactions to get dollar to finance their business or fund oversea tuition.

2 Likes

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by fulanimafia: 10:10am On Dec 27, 2015
It is a serious challenge, over here in England we are resorting to Nigerian business owners that need Naira paid into their accounts at home in exchange for pounds, and the rates are quite competitive. The issue is the sustainability of such a measure over time.
Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Nobody: 10:21am On Dec 27, 2015
Truth234:


We can't do without it, this is because Nigeria is a petrol-dollar economy. In fact there is no economy without the two, until we diversify. The restrictions we create unnecessary scarcity that will plunge naira the more and most likely forced customers to engage in all kinds of questionable transactions to get dollar to finance their business or fund oversea tuition.

You didn't answer his question.

Where will cbn get the dollars to PUMP into the market?
Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Truth234(m): 10:21am On Dec 27, 2015
fulanimafia:
It is a serious challenge, over here in England we are resorting to Nigerian business owners that need Naira paid into their accounts at home in exchange for pounds, and the rates are quite competitive. The issue is the sustainability of such a measure over time.

There is nothing like sustainability in the whole process, its a known fact that we do not have long term plan. From overly campaigned cashless policy back to cash, because now people we have to buy dollar and deposit in their domiciliary account for oversea transactions.

2 Likes

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Nobody: 10:26am On Dec 27, 2015
Truth234:


because now people we have to buy dollar and deposit in their domiciliary account for oversea transactions.

Are you sure this is allowed?
Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Truth234(m): 10:27am On Dec 27, 2015
Activa:


You didn't answer his question.

Where will cbn get the dollars to PUMP into the market?

Where will the people get dollars to finance their forex transactions if a whole CBN can't?

Mind your CBN still hoarding dollars for special transactions, abi have you seen politicians complain? Nigeria is still selling oil just low volume at a lower rate. I don't think it would be hard for CBN to sell another $20 million like they did last week based on our recent oil sales.

2 Likes

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Truth234(m): 10:29am On Dec 27, 2015
Activa:


Are you sure this is allowed?

100%
Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Nobody: 10:29am On Dec 27, 2015
Truth234:


Where will the people get dollars to finance their forex transactions if a whole CBN can't?

Mind your CBN still hoard dollars for special transactions, abi have you seen politicians complain? Nigeria is still selling oil just low volume at a lower rate. I don't think it would be hard for CBN to sell another $20 million like they did last week based on our recent oil sales.

What cbn holds is public knowledge. Our external reserve is less than $30b

If you continue to spend it without additions to it, it will finish and you won't be able to import anything again.

There's nothing like 'a whole cbn'. Cbn doesn't manufacture dollars.

There's nothing like 'hoarding' for special transactions. If you know how much they're hoarding say it.

Nigeria sells oil but the oil dollars is no longer as much as it used to be. That's the problem.

5 Likes

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Nobody: 10:34am On Dec 27, 2015
Truth234:


100%

Be careful not to misinform people.

If it's 100% allowed, then explain this:

https://www.thecable.ng/just-cbn-bans-deposits-dom-accounts

1 Like

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by AbuMaryam1(m): 10:35am On Dec 27, 2015
They should come back home and study here, most them not all of them are been sponsored by corrupt and I'll getting money. Buhari always punishing the rich isn't the good idea.

1 Like

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by EternalTruths: 10:37am On Dec 27, 2015
datola:
You said CBN should pump dollar into the economy. Where is the money? Our foreign reserves is dwindling by the day.

Can't we do without these foreign tastes for now?
Activa:

What cbn holds is public knowledge. Our external reserve is less than $30b
If you continue to spend it without additions to it, it will finish and you won't be able to import anything again.
There's nothing like 'a whole cbn'. Cbn doesn't manufacture dollars.
There's nothing like 'hoarding' for special transactions. If you know how much they're hoarding say it.
Nigeria sells oil but the oil dollars is no longer as much as it used to be. That's the problem.
You are right and very correct

But

Is oil the only thing Nigeria can exchange for dollars.? No.

Tell Buhari to encourage True Federalism by sending a bill to the National Assembly to create a law that will empower the States to control 25% of any mineral and non mineral wealth gotten within their territories. cool

This will spur massive exploitation of full economic potential fetching us extra dollars cool

2 Likes

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Truth234(m): 10:38am On Dec 27, 2015
Activa:


What cbn holds is public knowledge. Our external reserve is less than $30b

If you continue to spend it without additions to it, it will finish and you won't be able to import anything again.

There's nothing like 'a whole cbn'. Cbn doesn't manufacture dollars.

How do you mean without addition? They are selling it to Bureau de change for naira, is the reserve not their for the economy or are we not selling oil at all?

1 Like

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by EternalTruths: 10:46am On Dec 27, 2015
Truth234:


How do you mean without addition? They are selling it to Bureau de change for naira, is the reserve not their for the economy or are we not selling oil at all?


Nigeria is having difficult in selling their oil

This approach is a short term solution that is good but will backfire on the long run if Buhari fails to enthrone True Federalism.

So comrade

They are right on the short term cool kiss
Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Truth234(m): 10:47am On Dec 27, 2015
Activa:


Be careful not to misinform people.

If it's 100% allowed, then explain this:

https://www.thecable.ng/just-cbn-bans-deposits-dom-accounts

Be careful to always stay informed, change is the most constant thing. What you posted was in August, there are new policies and rules now.

http://venturesafrica.com/the-cbn-now-restricting-the-use-of-naira-cards-abroad/

1 Like

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by fulanimafia: 10:49am On Dec 27, 2015
AbuMaryam1:
They should come back home and study here, most them not all of them are been sponsored by corrupt and I'll getting money. Buhari always punishing the rich isn't the good idea.

That is neither practical, realistic nor true.
Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Bevista: 10:57am On Dec 27, 2015
EternalTruths:
You are right and very correct

But

Is oil the only thing Nigeria can exchange for dollars.? No.

Tell Buhari to encourage True Federalism by sending a bill to the National Assembly to create a law that will empower the States to control 25% of any mineral and non mineral wealth gotten within their territories. cool

This will spur massive exploitation of full economic potential fetching us extra dollars cool
Your obsession and hatred for Buhari is taking a toll on you. If you so knew that True Federalism and Resource Control was such a good thing, why wait till now to rush the new president? Why don't you take a chill pill and watch this government evolve its policies before you go all haywire.
---
Currently, oil accounts for over 95% of Nigeria's Foreign Exchange earnings. We need to find ways to export more items, so we can earn more FX. But these export measures will take time, so the focus should first be on Import Substitution. The administration is trying to achieve this by ensuring local refining and self-sufficiency in agriculture. These efforts alone can save Nigeria over $2bn monthly on FX payments.

4 Likes 1 Share

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Truth234(m): 10:58am On Dec 27, 2015
EternalTruths:


Nigeria is having difficult in selling their oil

This approach is a short term solution that is good but will backfire on the long run if Buhari fails to enthrone True Federalism.

So comrade

They are right on the short term cool kiss

They are having difficult does not mean we are not selling at all, and is Nigeria the only country facing the same challenge. Listen the entire world is facing this same issue, Nigeria lack of trade treaty is what got her into this mess. No country grows by sharing the nation's fortune among a few and transferring pain to the masses.

http://www.olafusimichael.com/2015/12/the-saddening-issue-of-foreign.html

2 Likes

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Bevista: 11:03am On Dec 27, 2015
Truth234:
How do you mean without addition? They are selling it to Bureau de change for naira, is the reserve not their for the economy or are we not selling oil at all?
The CBN is concerned about the NET inflow through the Foreign Reserves Account. If the demand exceeds inflow and they continue to meet all demand, then the Foreign Reserve will continue to decline.
---
Foreign Investors and International Merchants watch these Foreign Reserves like hawks. Once they feel that it has gotten uncomfortably low, they will refuse to do business with Nigeria because they will be worried about our capacity to meet up payment obligations. It is for this reason that the CBN tries to control the outflow from this Reserves to ensure that we still have enough to meet the most essential items like Fuel imports for a few months.
Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Nobody: 11:10am On Dec 27, 2015
Truth234:


Be careful to always stay informed, change is the most constant thing. What you posted was in August, there are new policies and rules now.

http://venturesafrica.com/the-cbn-now-restricting-the-use-of-naira-cards-abroad/



You said it's 100% allowed for people to pay cash dollar into their dom accts.

I gave you an evidence that deposit of dollar cash into dom accts is not allowed.

You posted a totally unrelated link of the ban on debit cards.

I can now see that you don't have a good understanding of the topic you started.

4 Likes

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Truth234(m): 11:12am On Dec 27, 2015
Bevista:
The CBN is concerned about the NET inflow through the Foreign Reserves Account. If the demand exceeds inflow and they continue to meet all demand, then the Foreign Reserve will continue to decline.
---
Foreign Investors and International Merchants watch these Foreign Reserves like hawks. Once they feel that it has gotten uncomfortably low, they will refuse to do business with Nigeria because they will be worried about our capacity to meet up payment obligations. It is for this reason that the CBN tries to control the outflow from this Reserves to ensure that we still have enough to meet the most essential items like Fuel imports for a few months.

That is not the reason, it is basically because of our rigid economic policy. With our reserve at current level, foreign investors are still pulling out and has pulled-out over 69.33 billion from our economy so far, according to NSE.

1 Like

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Nobody: 11:15am On Dec 27, 2015
Truth234:


That is not the reason, it is basically because of our rigid economic policy. With our reserve at current level, foreign investors are still pulling out and has pulled-out over 69.33 billion from our economy so far, according to NSE.

How can you describe holders of hot money in the capital market as foreign investors?

See the way you even linked reserve to the pull-out. Na wa o

Guy, you're going too deep into what you don't know.

4 Likes

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Truth234(m): 11:20am On Dec 27, 2015
Activa:


You said it's 100% allowed for people to pay cash dollar into their dom accts.

I gave you an evidence that deposit of dollar cash into dom accts is not allowed.

You posted a totally unrelated link of the ban on debit cards.

I can now see that you don't have a good understanding of the topic you started.

You are funny, what you gave was in August, this policies are for next year or why are people currently rushing Bureau De Change? Don't you know its demand by speculators that drive the forex rate at the parallel market. I personally sent someone to the bank and the bank said to initiate a TT transfer you need to go and buy your own dollar.

1 Like

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by EternalTruths: 11:21am On Dec 27, 2015
Bevista:
Your obsession and hatred for Buhari is taking a toll on you. If you so knew that True Federalism and Resource Control was such a good thing, why wait till now to rush the new president? Why don't you take a chill pill and watch this government evolve its policies before you go all haywire.
---
Currently, oil accounts for over 95% of Nigeria's Foreign Exchange earnings. We need to find ways to export more items, so we can earn more FX. But these export measures will take time, so the focus should first be on Import Substitution. The administration is trying to achieve this by ensuring local refining and self-sufficiency in agriculture. These efforts alone can save Nigeria over $2bn monthly on FX payments.

APC promised True Federalism which they must introduced if they are not deceivers cool
Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by babyfaceafrica: 11:23am On Dec 27, 2015
This OP is mischievous...dos of you arguing with him better move on...h won't agree with your rebuttal

2 Likes

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Truth234(m): 11:25am On Dec 27, 2015
Activa:


How can you describe holders of hot money in the capital market as foreign investors?

See the way you even linked reserve to the pull-out. Na wa o

Guy, you're going too deep into what you don't know.

What do you call foreigners that invest in an Economy? You know nothing, the guy mentioned foreign investors and I explained why they are pulling out, it has nothing to do with reserve. They are wary of our rigid economic policy and government reluctant to allow market to dictate Naira value. Trust me I live the market, I am sure the market is not paying you.

3 Likes

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Bevista: 11:26am On Dec 27, 2015
Truth234:
That is not the reason, it is basically because of our rigid economic policy. With our reserve at current level, foreign investors are still pulling out and has pulled-out over 69.33 billion from our economy so far, according to NSE.
There are a combination of factors responsible for the pull out:
---
(1) As an investor who has money in a country that is largely dependent on oil, you are aware that the economy and the currency will be largely influence by the price of oil in the international market. With lower oil prices, the CBN might be constrained to devalue the naira to protect Foregin Reserves. This move will devalue their investment so it's best to pull out now before the inevitable finally happens. It's not only Nigeria, even the Canadian Dollar is being hammered right now. Most oil dependent countries are having their currencies devalued.
(2) Also, with lower oil prices, the country will have less wealth and so very little disposable income to invest in the stock market to push prices up. Infact, most investors might start selling their shares to meet basic needs which will might cause a selling frenzy. So as an International investor, it's best to leave now.
(3) There is also the tight FX Controls that the CBN is currently implementing which is making the foreign investors very weary. They are not sure if they need to repatriate their funds tomorrow, whether they will be able to access dollars, so they better leave now while they still can.
(4) You have to also look at what is happening in the US. The FED has increased its interest rate for the first time in 10 years with opportunities for further increase in the coming quarters. This makes the US a relatively better investment destination, so International Funds are flowing out of emerging markets like Nigeria to the US.

2 Likes

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Bevista: 11:29am On Dec 27, 2015
Truth234:
What do you call foreigners that invest in an Economy? You know nothing, the guy mentioned foreign investors and I explained why they are pulling out, it has nothing to do with reserve. They are wary of our rigid economic policy and government reluctant to allow market to dictate Naira value. Trust me I live the market, I am sure the market is not paying you.
@Activa. They are still Foreign Investors as long as the funds are coming from a foreign country to invest in the local country. They just belong to sub category called Portfolio Investors since they focus on investing in the financial assets of the local country.

3 Likes

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Truth234(m): 11:41am On Dec 27, 2015
Bevista:
There are a combination of factors responsible for the pull out:
---
(1) As an investor who has money in a country that is largely dependent on oil, you are aware that the economy and the currency will be largely influence by the price of oil in the international market. With lower oil prices, the CBN might be constrained to devalue the naira to protect Foregin Reserves. This move will devalue their investment so it's best to pull out now before the inevitable finally happens. It's not only Nigeria, even the Canadian Dollar is being hammered right now. Most oil dependent countries are having their currencies devalued.
(2) Also, with lower oil prices, the country will have less wealth and so very little disposable income to invest in the stock market to push prices up. Infact, most investors might start selling their shares to meet basic needs which will might cause a selling frenzy. So as an International investor, it's best to leave now.
(3) There is also the tight FX Controls that the CBN is currently implementing which is making the foreign investors very weary. They are not sure if they need to repatriate their tomorrow, whether will be able to access dollars, so they better leave now while they still can.
(4) You have to also look at what is happening in the US. The FED has increased its interest rate for the first time in 10 years with opportunities for further increase in the coming quarters. This makes the US a relatively better investment destination, so International Funds are flowing out of emerging markets like Nigeria to the US.

I agreed with all you said but (4) The FED rate hike does not make US better investment destination, interest rate hike means increase in cost of servicing loans, which is not something investors want as they are struggling to cut cost with current global economic rout.

The only reason why US is not experiencing out flow is currently because even with additional 25 basis points, interest rate is just 0.5 percent, exactly the same thing UK and EU are offering. International funds are flowing out of emerging-markets because these emerging markets have not showing enough commitment via their economic policy that they have what it takes to stir their economy out of current rout. Two weeks ago BOJ detailed its plan for 2016, that clear cut decision strengthens Japanese Yen across board.

Investors want to know your plan so they can make investment decisions based on such, its something Nigeria and South Africa are yet to show, even though I believe with South Africa Pravin Gordhan, we will have something more substantial from them but we are yet to see it.

1 Like

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Nobody: 11:49am On Dec 27, 2015
Bevista:
@Activa. They are still Foreign Investors as long as the funds are coming from a foreign country to invest in the local country. They just belong to sub category called Portfolio Investors since they focus on investing in the financial assets of the local country.

Thanks.

Do we really need more of them or real FDI?

1 Like

Re: Challenges Of Naira ATM-Cards Forex Restriction By CBN by Bevista: 11:51am On Dec 27, 2015
Truth234:
I agreed with all you said but (4) The FED rate hike does not make US better investment destination, interest rate hike means increase in cost of servicing loans, which is not something investors want as they are struggling to cut cost with current global economic rout.
True that cost of servicing loans will increase in the US, but it is also true that yields on US Treasuries will also increase. The investors I am referring to here are the portfolio investors who are only interested in high yielding financial assets and not necessarily the real economy.

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