By Babajide Komolafe
This was one of the highlights of the Depository Corporation survey for February 2017 recently published by the Central Bank of Nigeria (CBN). Among other things, the survey revealed that total demand (current account) deposit of banks fell by 10.75 per cent to N8.6 trillion in February from N9.636 trillion in January. Similarly, currency outside the banks declined month-on-month (m-o-m) by 1.16 per cent to N1.61 trillion. Consequently, Narrow money supply declined m-o-m by 9.36 per cent (and 11.35 per cent year-to-date, y-t -d) to N10.21 trillion.
According to the report, broad money supply, M2, moderated month-on-month by 4.34 per cent to N22.37 trillion following a 0.46 per cent increase in Net Domestic Assets (NDA) to N13.82 trillion and an 11.21 per cent decline in Net Foreign Assets (NFA) to N8.55 trillion. The increase in NDA followed a 0.54 per cent m-o-m increase in Net domestic credit to N26.77 trillion which more than offset a 0.62 per cent increase in other liabilities (net) to N12.95 trillion.
According to a tweet from the CBN, and a statement from its spokesperson Isaac Okorafor, the CBN will sell forex to banks at N357/$1, while banks will sell to their customers at N360/$1 for invisibles (BTA, medicals, fees, etc).
All customers requesting forex for their personal and business travel allowances (PTA and BTA), tuition and medical fees, should buy at a rate not more than N360 to the dollar. “Banks are to post the new rates in their banking halls of their branches immediately,” he said.
This rate change only affects invisible transactions for retail users. The interbank rate, which trades at a band around the N307/$ mark still remains, however.
As a form of monitoring, Okorafor also mentioned that examiners will be sent out to ensure compliance and erring banks will be punished. This is coming on the back of complaints by Bureau de Change operators about the large profit margins that commercial banks are afforded by accessing FX at CBN rates.
This move by the CBN is expected to further push down the rates in the parallel market – where the exchange rate closed at about N390/$1 last week – especially if the CBN can maintain its interventions. This leads towards the exchange rate unification that Governor Emefiele hinted at in recent weeks. As at 20th February, the Naira was selling at about N522/$1 in the parallel market but has risen 38% within a month after the CBN pumped nearly $2.5 billion into the market.