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Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs - Business (2) - Nairaland

Nairaland Forum / Nairaland / General / Business / Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs (23019 Views) (2) (3) (4)

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Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by moneybag100: 10:27pm On Jan 11, 2016
Bbv
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by Observant: 10:29pm On Jan 11, 2016
seunmsg:
Good decision to lift the restriction on forex deposit, it's long overdue. The decision to stop providing forex to BDC's will only profit the deposit money banks. It's not in the overall interest of the country. Getting and exchanging forex will become more difficult and in the long run, dollars will become more expensive.

The resultant job loss as a result of this decision cannot be imagined. The BDC's decision should be reviewed and reversed. It's not a good decision.


Hahahaha..........This one affect am......LOL.
#Fireonbaba#

2 Likes

Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by Adesiji77: 10:30pm On Jan 11, 2016
Hmm..watching cool
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by tdikeh: 10:30pm On Jan 11, 2016
Can we then TRANSFER Our Cash Deposit out of the Country ?

This policy is SILENT on Foreign Transfer But only States Cash Deposits.
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by Caracta(f): 10:32pm On Jan 11, 2016
Just deposit restrictions lifted? I don't even understand. Do they want to mop up cash with BDCs? Will there be outflow?

1 Like

Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by adconline(m): 10:35pm On Jan 11, 2016
Trial and error economics... Oh btw, if you are going to borrow from IMF and foreign lenders, you shall not impose restrictions on foreign exchange so that lenders can pull their funds out whenever they deem fit!!
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by tolulakin(m): 10:35pm On Jan 11, 2016
Thank you for being a better thinker than most guys who come on here.

Disallowing sales of forex to BDCs is more like saying, 'okay we are now willing to sell to you oh, but we don't have the goods!'

By simple forces of demand and supply, increased scarcity of the dollar will only make it more expensive and the long term effects are unimaginable!

seunmsg:
Good decision to lift the restriction on forex deposit, it's long overdue. The decision to stop providing forex to BDC's will only profit the deposit money banks. It's not in the overall interest of the country. Getting and exchanging forex will become more difficult and in the long run, dollars will become more expensive.

The resultant job loss as a result of this decision cannot be imagined. The BDC's decision should be reviewed and reversed. It's not a good decision.

1 Like

Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by seunmsg(m): 10:36pm On Jan 11, 2016
Bevista:
I think the CBN position is appropriate in the prevailing circumstances. They have sacrificed the BDCs for the greater economic good of the whole country. This move will give the Bank some breathing space, as calls for devaluation will now be dampened
---
However, if you read the full text of the CBN press statement (link below), you will see the CBN stating that Nigeria is the only country in the world where the Central Bank sells dollars to dealers. The Bank also accused the BDCs for exploiting price arbitrage to round-trip the sold dollars. The CBN also notes that the number of BDCs has risen exponentially as operators try to access "cheap" dollars resulting to over $6bn demand annually.
---
As for the job losses in BDCs, the CBN is trying to save many more job losses that would occur from other sectors if they continue the current policy.
---
http://www.cbn.gov.ng/Out/2016/CCD/Press%20Release%20-%20CBN%20to%20stop%20Dollar%20Sales%20to%20%20BDCs%20January%202016.pdf

Thanks for link, i just finished reading the full press statement by CBN. Truth be told, the DMB's are also guilty of almost all the allegations levelled against the BDC's. With this decision, we are all at the mercy of the DMB's as far as forex is concerned. So, can CBN effectively monitor these banks to ensure that they play strictly by the rules? Considering Emefiele's background as a former Zenith bank MD, I doubt if he can really come down very hard on any erring bank. He's part of them and can't be trusted.

Going forward, CBN should just ban the operations of the BDC completely, at least, for now. Allowing them to still operate while not selling forex to them will be counterproductive. Those guys will find a way to sabotage the system in connivance with the DMB's to survive. Round tripping will be at the highest level. It's just like CBN's earlier decision to stop providing forex for about 43 items without completely banning their importation. The importers of those items still found a way of getting forex locally to import them and thereby pushing the exchange rate very high. In the long run, I hope this decision will pay off.

2 Likes

Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by Ymodulus: 10:37pm On Jan 11, 2016
Caracta:
Just deposit restrictions lifted? I don't even understand. Do they want to mop up cash with BDCs? Will there be outflow?


It sounds like a conspiracy theory. But I see your point of view dear and I think that'd what they want to do
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by Centurion13(m): 10:38pm On Jan 11, 2016
Good observation,

This will further push exchange rate up, because if customers deposited cash into their account , there won't be cash to withdraw at some point and they won't be able to transfer fx out because of shrinking reserve and inadequate lines with correspondent banks. It will get to a level where dollar cash won't be available and customers will have no choice but to collect their FX in naira equivalent.

Another thing that may happen is that people will be sceptical of depositing cash into their domiciliary accounts and status quo will be maintained with regards to exchange rate


fulanimafia:
Without BDC's, where would Nigerians easily get the forex to deposit in the first place?

There is however no doubt that this move would ease pressure on forex demand which would ultimately help the recovery of the Naira....which is the ultimate aim.

Carry go.
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by KoldKash(m): 10:39pm On Jan 11, 2016
fulanimafia:
Without BDC's, where would Nigerians easily get the forex to deposit in the first place?

There is however no doubt that this move would ease pressure on forex demand which would ultimately help the recovery of the Naira....which is the ultimate aim.

Carry go.

Don't let them fool you.this measure they are taking will reduce dollar supply and that will in turn increase demand for dollars.any fool knows increase in demand increases price and that way the dollar will only keep soaring higher which is the vested aim of CBN.That way, they'll be able to scrape off a few extra dollars on crude oil sales to make up for the falling prices of oil
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by Izugab(m): 10:40pm On Jan 11, 2016
https://www.nairaland.com/2854464/nairalanders-please-come-aid-because


pls nairalanders, help me....Am in dire pains now. No matter how little the help may be, I believe it'll solve my problem somehow.
Just click the link and read my story. Many have called on lalasticlala and fynestboi to move it to front page but they couldn't help me push it to front page.
Education is my life. I can't afford to miss this admission after the years it took me to gain admission.

thanks
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by Maski87: 10:40pm On Jan 11, 2016
This is a meaningless knee-jerk reaction, the don't know what they are doing, the problem is as long as oil prices are down there will be a shortage of forex, this measure is window dressing

2 Likes

Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by Abbeyme: 10:41pm On Jan 11, 2016
BIGTinfotech:
A welcome development. Now business can continue.
*sighs*

Little wonder what Largarde came to do.

Exactly whats on my mind...

Largarde's mission wasnt in vain afterall...

1 Like

Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by Atlantian: 10:44pm On Jan 11, 2016
Can I wire money out to abroad ? Can I ? Someone help me ask the cattle rearer.
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by Adesiji77: 10:45pm On Jan 11, 2016
Ymodulus:


It sounds like a conspiracy theory. But I see your point of view dear and I think that'd what they want to do

Anything is possible...had a wild thought that this could just be a way to mop up the FX cash. Time will tell... lipsrsealed

Cc: Caracta
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by Guk: 10:46pm On Jan 11, 2016
Simple law of Demand and Supply has been ignored. If you allow us to collect our Western Union in our $$ with which it was sent to us, the BDCs will have sufficient inflow into the Autonomous market and exchange rate will come down. CBN Gov forgets that there was a time abt 4 years ago that Black Market and CBN rates were almost the same until Emperor SLS introduced by force by force that we must collect our WU in =N= @ CBN rates and the banks in return gave us our same money bank at 15% loss to us through our Debit cards.

8 Likes

Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by Adesiji77: 10:47pm On Jan 11, 2016
Abbeyme:


Exactly whats on my mind...

Largarde's mission wasnt in vain afterall...

"The witch cried yesterday..." cool

Cc: BIGTinfotech
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by Bevista: 10:47pm On Jan 11, 2016
seunmsg:
Thanks for link, i just finished reading the full press statement by CBN. Truth be told, the DMB's are also guilty of almost all the allegations levelled against the BDC's. With this decision, we are all at the mercy of the DMB's as far as forex is concerned. So, can CBN effectively monitor these banks to ensure that they play strictly by the rules? Considering Emefiele's background as a former Zenith bank MD, I doubt if he can really come down very hard on any erring bank. He's part of them and can't be trusted.

Going forward, CBN should just ban the operations of the BDC completely, at least, for now. Allowing them to still operate while not selling forex to them will be counterproductive. Those guys will find a way to sabotage the system in connivance with the DMB's to survive. Round tripping will be at the highest level. It's just like CBN's earlier decision to stop providing forex for about 43 items without completely banning their importation. The importers of those items still found a way of getting forex locally to import them and thereby pushing the exchange rate very high. In the long run, I hope this decision will pay off.
@ the bolded. The essence of excluding those items was not to immediately stop importation, it was to conserve FX Reserves by pushing those importers to source FX from the parallel market instead of the official rate.
---
Quite frankly, I don't expect most people to buy FX directly from DMBs. Most people are going to buy from BDCs/Abok!s and then deposit same in their domiciliary accounts, so I don't see the DMBs playing a big role on the retail end. They are probably going to be more active at the institutional and interbank levels.
---
The key now is for CBN to effectively monitor these banks to ensure that Dasuki yam eaters do not use the opportunity to transfer these yams out to their offshore barns.

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Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by ZUBY77(m): 10:51pm On Jan 11, 2016
I think CBN should allow people receive their Western Union in Dollars.

1 Like

Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by theV0ice: 10:51pm On Jan 11, 2016
modath, Abeg where is the location of the gate Dasuki opened? make i go get my own share? cheesy

1 Like

Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by BIGTinfotech: 10:52pm On Jan 11, 2016
smiley
Adesiji77:


"The witch cried yesterday..." cool

Cc: BIGTinfotech
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by Truth234(m): 10:52pm On Jan 11, 2016
puskin but why did you closed this thread https://www.nairaland.com/2858666/cbn-stops-forex-sale-bdcs
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by anonimi: 10:53pm On Jan 11, 2016
They listened to IMF.
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by bidemi12(m): 10:56pm On Jan 11, 2016
fulanimafia:
Without BDC's, where would Nigerians easily get the forex to deposit in the first place?

There is however no doubt that this move would ease pressure on forex demand which would ultimately help the recovery of the Naira....which is the ultimate aim.

Carry go.

Keep dreaming. The country's over dependence on oil and the refusal of your leaders to diversify the economy is the reason for the plunge of the dollar. Like it or not, the demand will always be there. And you know what happens when there is a huge demand of a commodity and there is scarcity of said commodity; Blaaaaaccccckkkkkk maaaarrrrrkkkkkeeet.
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by klassic(m): 11:05pm On Jan 11, 2016
I think CBN is trying to stop people especially BDC's from hoarding dollars, and crating artificial scarcity.Banks are cheaper, so i can simply send western union or make direct deposit, so street prices go fall small.
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by masseratti: 11:09pm On Jan 11, 2016
Government should not only stop selling forex to BDC, naira should be allowed to be determined by market forces, having an official rate and black market rate is same thing as subsidy, it's killing the economy, some few people are the ones making money from it running others down, this practice must stop.
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by seunmsg(m): 11:10pm On Jan 11, 2016
Bevista:
@ the bolded. The essence of excluding those items was not to immediately stop importation, it was to conserve FX Reserves by pushing those importers to source FX from the parallel market instead of the official rate.
---
Quite frankly, I don't expect most people to buy FX directly from DMBs. Most people are going to buy from BDCs/Abok!s and then deposit same in their domiciliary accounts, so I don't see the DMBs playing a big role on the retail end. They are probably going to be more active at the institutional and interbank levels.
---
The key now is for CBN to effectively monitor these banks to ensure that Dasuki yam eaters do not use the opportunity to transfer these yams out to their offshore barns.


The problem we are facing at the moment is the inadequacy of our forex earnings to meet our importation requirement. So, we have only two possible solutions. We either find a way to increase our forex earnings or find a way to considerably reduce our importation.

Increasing our forex earning in the short term is almost impossible since we are not exporting any major commodity apart from crude oil whose price is currently down. So, we are left with the second option of reducing importation. CBN said they won't provide forex for 43 items but the importers can get the required forex from the parallel market. So, what's the effect of sourcing forex from the parallel market? Increase in the exchange rate.

I am not an economist but I think the decision makers at CBN should work towards finding a way to discourage importation in the short time. That's the only way to help the naira.

2 Likes

Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by Nobody: 11:10pm On Jan 11, 2016
seunmsg:


[b]The resultant job loss as a result of this decision cannot be imagined. [/b]The BDC's decision should be reviewed and reversed. It's not a good decision.

YOU SEEMED TO HAVE MISSED YOUR DRUGS THIS NIGHT..PLEASE WHATS THE RESULTANT JOB LOSS EFFECT.
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by igboboy3(m): 11:19pm On Jan 11, 2016
Caracta:
Just deposit restrictions lifted? I don't even understand. Do they want to mop up cash with BDCs? Will there be outflow?


Just inflow. Deposit your dollars first then they'll talk about withdrawal

1 Like

Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by Bevista: 11:21pm On Jan 11, 2016
seunmsg:
The problem we are facing at the moment is the inadequacy of our forex earnings to meet our importation requirement. So, we have only two possible solutions. We either find a way to increase our forex earnings or find a way to considerably reduce our importation.

Increasing our forex earning in the short term is almost impossible since we are not exporting any major commodity apart from crude oil whose price is currently down. So, we are left with the second option of reducing importation. CBN said they won't provide forex for 43 items but the importers can get the required forex from the parallel market. So, what's the effect of sourcing forex from the parallel market? Increase in the exchange rate.

I am not an economist but I think the decision makers at CBN should work towards finding a way to discourage importation in the short time. That's the only way to help the naira.
@ the bolded. Unfortunately, that is not the direct job of Monetary authorities. That responsibility falls directly on the table of Fiscal authorities.
---
The president needs to get his team to come up with a comprehensive & integrated policy covering agriculture, trade & industries, import substitution, etc. Ideally, the CBN should only use its monetary tools to complement government plans.
---
But, unfortunately, the CBN Governor seems to be left on his own with very little contribution from Kemi & Co. Nobody know what the economic policies of government are. Their communication management is zero. If the government wants to ban importation of certain items, then they should make it clear and then tell us what they will do in the short term to promote local production as substitutes.
Re: Cbn Lifts Forex Deposit Restrictions & Also Cancels Forex Sales To BDCs by grandstar(m): 11:29pm On Jan 11, 2016
Bevista:
The CBN has made the right call in the prevailing circumstances. I had consistently maintained that the strict controls will have unintended consequences.
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This move will give the CBN some breathing space and dampen calls for devaluation. This will lead to some inflation, but it's a price that has to be paid to prevent a full blown economic crisis.
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The CBN monitoring & compliance team should watch the banks like Hawks to prevent illicit outflows.

I doubt it. Demand for forex on the black market will rise for deposit into dollar denominated card accounts and also to wire abroad by importers unable to access the CBN. The prognosis is not good.May touch 300 soon.

1 Like

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