Banks Pitch FX Sales, Explain Requirements to Customers
Following the recent decision of the apex bank to cut off dollar supply to bureau de change (BDCs) operators in Nigeria, deposit money banks have officially taken over foreign currency sales to customers.
Many banks have started to pitch their foreign exchange services to customers via emails, explaining how foreign exchange processes work including required documents. The return of form A in the sector is expected to boost banks earnings from the third quarter over piles of unmet dollar demand in the Nigerian economy.
In the just concluded week, the Nigerian Central Bank ban on BDCs brought a new dimension to the management of the foreign exchange supply chain in the local market.
In compliance with the CBN demand asking banks to set up dedicated teller points for onward sales to retail customers, lenders have initiated massive campaigns to attract retail customers’ attention.
In several emails sent to clients, banks as an intermediary in the dollar supply chain have taken it upon themselves to explain the basic requirements for accessing foreign currency via the channel.
According to emails reviewed by MarketForces Africa, banks will be selling foreign currencies for personal and business travel allowance to users that meet requirements.
Nigerian lenders would be a go-to place for international tuition fees and medical bills payment henceforth, a move that some analysts think would have positive impacts on users if the supply base is strong.
When asked if banks are the right channels for dollar sales to Nigerians, reactions were mixed as some customers said this could raise access risks when demand is urgent.
MarketForces Africa analysts however express a view that financial institutions are the right channel for selling foreign currencies to users.
In the past, Central Bank was supplying more than $5 billion to currency exchangers in Nigeria despite their shady practices and non-compliance risk.
Nigeria’s external reserves at $33.3 billion cover just five months of imports, according to some analysts in separate macroeconomic reports.
“We believe that if the apex bank can raise control and monitoring policy on foreign currencies disburse to banks, ensure it keeps a tab on the likelihood of round-tripping based on lenders’ antecedent, exchange rate pressure will reduce”.
Analysts believe channelling foreign currencies sales via Nigerian banks remain the best for the economy as a way to reduce rent-seeking and low economic contribution from currencies traders.
“Selling currencies should not be real economic activities if CBN has the capability to develop channels for meeting demands for individuals and corporates”, some analysts explained to MarketForces Africa.
He noted that banks, apart from the CBN, should be in charge of local and foreign currencies available in the country, though with increased control and monitoring.
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Banks Pitch FX Sales, Explain Requirements to Customers
