Holidaymakers seeking forex via personal travel allowances (PTA) for their overseas trips are being told to look elsewhere by banks as forex scarcity bites harder.
Findings by Nairametrics reveal holidaymakers’ requesting for forex have been met by declines as banks inform them that they have either not received any new allocations or they have more demand for forex when compared to supplies. This is happening just days to Christmas.
No Forex Today
Akpobome, a customer who spoke to us on the condition that we use his first name only, said he has been trying to secure forex for the last two weeks. However, each time he approached the bank he was told they had no forex and asked to come back again.
Further checks by Nairametrics confirm the situation is the same across most banks as travelers either end up with zero dollar purchases from the banks or getting less than the approved $4,000. Akpobome also confirmed in a text message.
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“I bought from the black market but my bank just called me now to say they have me on queue for N2,000 so I should be on standby to come in anytime they are ready for me.”
A staff of another bank who spoke to Nairametrics on condition of anonymity explained that the reason for the scarcity was the limited allocation they get from the central bank.
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“We have not received any allocation this week but we hear we could get it by Thursday” she explained. The CBN credit banks on Fridays with allocation for payments of PTA.
With limited chances of getting forex through official sources, most travelers have resorted to the black market where they are buying at between N470 and N475 to one dollar. Black market operators who spoke to Nairametrics confirm some of the customers buying are people rushing to travel ahead of an impending travel lockdown due to the second wave of covid-19 spreading across the world over.
For historical context read: Naira gains big at black market as CBN targets $2 billion monthly from IMTO
Exchange Rate remains stable
Despite the forex scarcity, the exchange rate at the black market has remained stable at between N470-475/$1. Nairametrics research team posits this is due to the following reasons;
- The recent central bank guidelines on forex remittances now allow banks to pay beneficiaries in dollars, increasing forex liquidity at the black market.
- This in turn also means, banks cannot mix dollars for beneficiaries of remittances with demand from PTA users which may have been possible if there were no liquidity shortages.
- NM Research also posits that most Nigerians have cut short their travel plans this year due to Covid-19 reducing the demand for forex.
- On the contrary, most Nigerians who live abroad are back in town ahead of the Christmas and New Year celebrations and have supplied the forex market with liquidity.
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Who is to blame?
While most critics will place the blame squarely on the central bank’s forex policies, some travelers who complained to Nairametrics, blamed BDC operators for hoarding forex allocations.
- Most complain that each time they approach the BDC for forex based on the official rates, they tell you they don’t have but in the same breath they are happy to sell to you based on black market rates.
- BDC operators who spoke to Nairametrics on condition of anonymity for fear of being victimized claimed that cannot be the case as they face the same supply shortages banks also face.
- In a circular issued by the CBN in November, it advised BDC operators to sell forex to end-users Not more than N392/1USD based on an allocation of $10,000.
- According to Ango Gold and Ismail Gold located at Yaba and Ikeja respectively, people are buying and sales have increased this December largely due to travelers going abroad.
- However, most of the sales are at parallel market rates as they also face dollar shortages.
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What you should know
Nairametrics reported some weeks back that Nigerians have spent roughly $65 billion in the last 10 years on travel-related allowances, data from the Central Bank of Nigeria reveals.
- In the last 5 years, travel allowances – which can also be broken down into business and personal travel, topped $35.5 billion between 2015 and 2019.
- Tens of thousands of Nigerians travel overseas annually to get quality education or for medical tourism, piling pressure on dollar demand locally.
- In Nigeria, the CBN allows about $4,000 quarterly for personal travel allowances, $15,000 per term/semester as allowances for payment of school fees.
- The Central Bank of Nigeria has announced the resumption of the sale of forex to Bureau De Change starting August 31, 2020. This was about 5 months after it stopped sale as Nigeria imposed travel lockdowns.
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