Nigerian banks are texting their customers about the availability of forex for personal travels. A series of text messages monitored by Nairametrics show commercial banks informing their customers that they can now purchase forex.
A text from a commercial bank read’ “Dear Client, purchase USD for eligible invisibles (Tuition fees, Upkeep, Medical Payments, Travel Allowances, etc) and SME transactions at our branches.”
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Another commercial bank sent the following message to its customers; “Back in Business? Getting Ready for Back to School? No Need To Worry About FX.” Most users on social media platform, Twitter, also confirm receiving these messages.
The messages follow recent pronouncement by the CBN that it is ready to provide forex for investors who wish to repatriate funds from the country despite the drop in oil prices and its effect on forex supply.
— Central Bank of Nigeria (@cenbank) May 10, 2020
The CBN also insisted that “Foreign Exchange available would be devoted to strategic importation or service obligations that are priority” as Nigerians worried about their ability to secure forex for essential items once the global lockdown eases.
How can you buy it?
Findings from Nairametrics indicate banks are willing to sell forex but currently sell to students, parents, and guardians looking to pay school fees. We understand forex is not being sold for PTA since air travel is still suspended in most countries following the global lockdowns. However, to purchase the forex, all you need to do is approach your bank with evidence of use.
As part of its move to assure the market that forex supply will be available, the CBN agreed to a depreciation of the exchange rate at the forwards market. Last week, Nigeria’s 5 years onshore Non-Deliverable forward contract posted its biggest drop by plunging 27% from N413.36 to close at N569.69 a price differential of N156. The 1-year Non-Deliverable forward contract was down 5% from N394.29 to close at N421.22 a price differential of N26.93.
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One month NDF is now N395/$1 suggesting an imminent devaluation in the I&E window which could also impact the current official exchange rate of N360/$1 as well as the BDC rate which was devalued to N370/$1 some weeks back.
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The move triggered worries that the exchange rate might be devalued in line with the depreciation at the forwards market. Reports reaching Nairametrics indicate the apex bank is desperate to assure investors that it has enough forex to defend the naira for now and does not see any immediate need for a devaluation.
Oil prices staged a rebound in the last two weeks with Nigeria’s Bonny Light crude hitting $27 as at Thursday morning. Nigeria also just recently banked the $3.4 billion IMF facility helping to boost external reserves. The data from CBN shows that the external reserves increased sharply by $1.36 billion in just 13 days, rising from $33.42 billion as of April 29, 2020, to about $34.78 billion on May 12, 2020. The Nigerian external reserve had been on a downward slide since last year, after hitting a high of $45.17 billion on June 11, 2019. It should be noted that the reserve lost over $11 billion within a space of 10 months.