The Central Bank of Nigeria has issued a new circular targeting customers who purchase Forex from the inter-bank market. The new circular places a 48 hour mandatory timeline for funds purchased from the autonomous/interbank to be utilized. If such funds are not utilized they will have to be returned to the CBN for repurchase at the CBN rate. This is obviously another policy aimed at eliminating speculation of the dollar which has seen the naira plummet in recent months.
This new directive suggest the CBN is trying to eliminate any artificial demand that may be caused by hoarding of dollars by banks, dealers and customers. The CBN probably believes some of the people buying this forex actually don’t use them for any legal transaction but rather use them as some form of arbitrage to take advantage of the system. This new circular follows that released on Wednesday mandating banks and forex dealers to keep a net zero position on forex holding.
It will be interesting to see how foreign investors seeking to pull money out of Nigeria will take this new policy. The policy may back fire as some will see this as introduction of stiff capital controls by the CBN.
See the new circular