The Central Bank of Nigeria (CBN) has launched a triple offensive aimed to save the naira from foreign exchange pressure. They include the reintroduction of the Retail Dutch Auction System (RDAS), a ban on the importation of all foreign currencies, except with CBN approval, and a ban on the redeeming of inward money transfers in any other currency apart from the naira but at the prevailing inter-bank foreign exchange rate.

The new regime RDAS takes effect from today following the suspension of the Wholesale Dutch Auction System (WDAS) at the official foreign exchange market.

The CBN said in a statement issued yesterday in Abuja that the RDAS would allow only customers of Deposit Money Banks to buy foreign exchange at the CBN through their banks as against the WDAS, where the banks bought foreign exchange at the central on their own accounts, which they, in turn, sold to their customers.

The Deputy Governor, Economic Policy, CBN, Dr. Sarah Alade, said in the statement that the re-introduction of RDAS is expected to prevent round tripping of the foreign exchange purchased at the CBN official window to unauthorised channels.

She said that henceforth, no individual, group of persons or investors would be allowed to bring any type of foreign currency into the country without CBN’s approval, explaining that the move is aimed at saving the naira and the economy from external threats and dominance.

“In its determination to save the naira and the Nigerian economy from external threats and dominance, the CBN has banned the importation of all foreign currencies, except with the approval of the CBN,” Dr. Alade said.

“The latest move is sequel to the bank’s withdrawal of the operating licences of 20 Bureaux de Change found to have purchased and sold huge sums of United States’ dollars with no documentation to show details of the transactions,” she added.

Alade said the bank was worried about the existence of strong foreign exchange demand pressures from domestic sources, which were not necessarily linked to increase in the import of goods and services.

She said the management of the CBN also observed the surge in dollar cash importation by Deposit Money Banks (DMBs) and the huge cash sale of the dollar to the BDCs (Bureau de Changes (BDCs) by the DMBs.

While noting that the country currently ranked as the largest importer of US dollars, she said the purchase and sale of the currency was not adequately being documented by the BDCs.

Alade said if the trend was not contained, it could pose grave threats to the value of the naira as well as the Nigerian economy, which she said had gradually become dollarised.

She said the CBN Governor, Mr. Lamido Sanusi, and his team had decided to take an immediate action to safeguard the naira and ensure its stability in the face of the aforementioned challenges.

Meanwhile, the apex bank has issued a circular mandating all DMBs to redeem all inward money transfers in naira to the recipients at the prevailing inter-bank foreign exchange rate. This, the CBN noted, is in line with international best practice.

While condemning the action of the errant BDCs, the CBN emphasised the continued relevance of the BDCs in the foreign exchange market, even as it stressed that it would continue to support their operations in line with the existing guidelines.

To guard against stifling the activities of the BDCs, the CBN has authorised all banks to deal at the official foreign exchange market rate.

It also warned that the banks could only sell foreign exchange to the BDCs subject to a maximum of $250,000 per week per BDC.

The CBN also advised all BDCs to continue to comply with the conditions of their operating licences, including the proper rendition of returns with respect to the purchase and sale of foreign exchange.

The bank also assured members of the public of its commitment to maintaining price stability and the preservation of the value of the naira in accordance with its mandate.

•Photo shows CBN Governor Sanusi.

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