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CBN to launch digital currency by October

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The Central Bank of Nigeria with its stakeholders outlined its digital currency initiative via a private webinar held today.

The Nigerian Central Bank Governor, Godwin Emefiele had earlier announced that the bank will be working on a central bank digital currency during the 306th Banker’s Committee meeting.

According to private sources, the pilot scheme will be launched on October 1st, 2021.

The press briefing delivered by the Director IT department, Rakiya Mohammed, at the end of the meeting further explained that the Bank had been conducting research in regards to central bank digital currencies since 2017 and may conduct a proof of concept before the end of this year.

The project name is tagged Project GIANT and it will use the Hyperledger Fabric Blockchain.

Nigeria’s central bank further revealed that the importance of eNaira includes Macro management and growth, cross border trade facilitation, financial inclusion, monetary policy effectiveness, improved payment efficiency, revenue tax collection, remittance improvement, and targeted social intervention.

The Nigerian Apex Bank also underlined the benefits for the fintech ecosystem that include enhanced operational efficiency, opportunities for fintech start-ups in building services/products like financial inclusion that will contribute to the economic growth, and the creation of a new system complimenting the traditional payment system.

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CURRENCIES

UBA publishes names, BVN and account numbers of forex defaulters

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The United Bank of Africa has published the names, Bank Verification Numbers (BVN) and account numbers of some customers alleged to have violated the forex policy of the Central Bank of Nigeria.

This development is coming after the CBN directed banks to expose customers who engage in fraudulent and unscrupulous tactics to obtain foreign exchange from banks.

The UBA disclosed this in a publication on its website titled, ‘CBN FX defaulters’ on Friday.

What UBA said in its statement

The bank stated, “In compliance with the directive of Central Bank of Nigeria mandating banks to publish the names of defaulters of the forex exchange regulation.

“Based on regulatory directives, the following customers cancelled their trip and failed to return the PTA availed to them despite several mails, text messages and follow up phone calls.”

The bank also included the name of a customer who it said, “presented fake visa to apply for PTA.”

 

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CURRENCIES

We have dollars – Nigerian banks tell customers

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Deposit money banks in the country have moved to implement the directive from the Central Bank of Nigeria (CBN) to set up teller points within their banking halls to attend to the forex needs of customers.

This is evidenced by several emails sent by the banks to their customers over the weekend.

Recall that in an unexpected move last week, Godwin Emefiele, the CBN governor announced the discontinuation of the sale of forex to Bureaux de Change operators in the country citing a slew of misdemeanours by the latter, which were jeopardizing the apex bank’s FX policy, as the reason behind the ban.

Emefiele had in the same breath, instructed banks to set up teller points within the banking halls to attend to the legitimate forex needs of customers.

An email from First City Monument Bank (FCMB) to customers read in part:

“We are pleased to inform you that the Central bank of Nigeria (CBN) has approved the resumption of sales of Personal or Business Travel Allowance (PTA/BTA).

To access this, simply visit any FCMB branch today with the following documents and make your request.

  • Duly completed form A
  • Valid international passport and visa
  • Return flight ticket

For more information, please contact your Relationship Manager.

Thank you for choosing FCMB.”

A similar email from Zenith bank read:

“Personal/Business Travel Allowance (PTA/BTA) available for sale at Zenith Bank Branches nationwide. Simply walk into any of our branches with your travel documents.”

The email from UBA stated that the bank had implemented dedicated teller points for FX transactions at all their branches nationwide, listing PTA/BTA, foreign school fees payment, receipt of money transfer (FX) in cash and access to other remittance services “with ease” as services available to customers.

From Guarantee Trust Bank and Stanbic IBTC, the notifying email was much lengthier with Stanbic Bank including a subtle caveat.

“…As part pf our commitment to continually serve our customers, we will ensure all customers’ requests are handled on a first served priority basis based on the availability of funds both in cash and electronically…”

Guaranty Trust Bank’s email had even more caveats. While listing the pre-qualifying documents for PTA/BTA, they noted:

“…PTA request is limited to a maximum of $4000 per quarter per applicant.”

In the same breath, the bank also listed, “A return ticket originating from Nigeria with a minimum travel time of 5 hours to your destination,” as one of the qualifying documents for accessing PTA/BTA from the bank.

It is interesting to note that flights to some African countries are completed well under 5 hours and this leaves one wondering about GT Bank customers needing forex to make such trips. On an Air Peace carrier, for instance, a trip from Lagos to Accra is estimated to take 1 hour. Lagos to Banjul (The Gambia) takes 4 hours 45 minutes, Lagos to Dakar (Senegal) takes 3 hours 30 minutes while Lagos to Freetown takes just 3 hours.

These notwithstanding, bankers who spoke to our source  (on condition of anonymity) confirmed that the banks are fully prepared to meet individual and business forex needs, stating that the CBN’s move in ending forex sale to BDCs was the right move.

“The banks are more than capable of rendering this service,” Kayode (name changed), a staff of one of the top tier banks told our source .

“The issue has always been that the BDCs had constituted themselves into a powerful cabal with far-reaching influence among Nigeria’s powerbrokers. This is why they were able to take over such a crucial banking function, but the days of their reign are over now. We are only hoping that Emefiele is not removed from office for this bold action,” he added.

When asked if the CBN had funded the banks with sufficient forex to meet customer requests, another bank staff told our analyst:

“All the branches of all the banks have been capacitated to disburse FX to customers. You can walk into any bank branch and change your naira to dollar up to the daily limit set by the bank.

“You can also receive FX directly into your domiciliary account, which unlike before, now takes only a few minutes to set up. What government wants is for monies received from abroad to be documented, which is why the CBN has asked that we route FX inflows through domiciliary accounts.”

When asked about the availability of forex for transactions such as overseas payments, he said:

“The bank will not give you forex to make overseas payments; you present the necessary paperwork to them and they debit your account and credit the organisation where you want to send the money to abroad.

“The CBN does not want individuals to start another round-tripping racket and this is why the regulator has put this rule in place. This is the procedure for making oversea payments like school fees, medical bills, and payment of suppliers for goods (or services) to be imported into the country.”

Our respondent also confirmed that the exchange rate would fall over the coming weeks as the panic and furore over the CBN/BDC debacle subsides and people start to see that the system has been rejigged in their favour. He advised individuals to open domiciliary accounts and save in forex if they can afford to.

In case you missed it

It was reported last week that the CBN governor instructed Deposit Money Banks (DMBs) to set up teller points in designated branches for the sale of foreign exchange to meet legitimate forex requests of their customers.

This came after the apex bank announced that it will discontinue the sale of dollars to the Bureau De Change (BDC) operators.
The directive was contained in a memo by the CBN to the deposit money banks and signed by the Director, Bank Supervision Department of the apex bank, on Thursday, July 28, 2021, in Abuja.

The CBN in the memo also asked the banks to publicize the locations of the designated branches and make necessary arrangements to sell forex to customers in cash and/or electronically.

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CURRENCIES

Naira gains at forex markets as dollar supply rises by 108.5% with drop in demand

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Friday, 30th July 2021: The exchange rate between the naira and the US dollar closed lower at N411.44/$1 at the official Investors and Exporters window. 

Naira appreciated against the US dollar to close at N411.44/$1 on Friday, representing a 0.06% gain compared to N411.67/$1 recorded on the previous day.  

Also, naira appreciated the parallel market to close at N515/$1, having traded at N520/$1 on the previous day. This represents a N5 gain when compared to the previous day’s rate as dollar supply rose significantly by 108.5% 

The recovery is coming after exchange rate had had dropped following the announcement of the ban placed on the sale of forex to BDC operators in Nigeria by the CBN Governor, Godwin Emefiele. 

The naira strengthened further as dollar demand dropped with the BDC operators assuring of continuous provision of foreign exchange services despite non-allocation of forex by the CBN.

Trading at the official I&E window

Naira appreciated against the US dollar at the Investors and Exporters window on Friday to close at N411.44/$1, representing a 23 kobo gain when compared to N411.67/$1 recorded on Thursday.  

  • The opening indicative rate also appreciated from N411.58/$1 recorded on Thursday, 29th July 2021 to close at N411.40/$1 on Friday.
  • An exchange rate of N412.25 to a dollar was the highest rate recorded during intra-day trading before it settled at N411.44/$1, while it sold for as low as N400/$1 during intra-day trading.
  • Meanwhile, forex turnover at the Investors and Exporters (I&E) window rose by 108.5% on Friday, 30th July 2021.
  • According to data tracked  from FMDQ, forex turnover increased from $58.07  million  recorded on Thursday, 29th July 2021 to $121.08 million on Friday.

Cryptocurrency watch

The world’s most popular and largest cryptocurrency, Bitcoin, dropped by 5.91% in the early hours of Monday to close at $39,753.20 after it had built some momentum and hit the highest level since the middle of May.

  • Bitcoin had gained on Sunday for an 11th day in the past 12 and traded up to $42,606, its highest since May 18. 
  • Bitcoin, which for weeks trended downward from its mid-April record near $65,000, has now spent more than a week building back as supportive comments from Elon Musk and Cathie Wood helped bump it out of a declining trend. 
  • Edward Moya, senior market analyst for North America at Oanda Corp., Edward Moya, in his note on Friday said that retail interest is strong, while institutional interest is somewhat lagging and needing fresh endorsements. 
  • Meanwhile, the second biggest cryptocurrency by market capitalization, Ethereum, dropped by 2.66% to trade at $2,551.84. 

Crude oil price

The crude oil market was bearish on Sunday evening as Brent crude dropped by 1.14% to close at $74.55 per barrel as oil fell after 4 monthly gains with data signaling a slowdown in China and investors monitored the spread of the delta coronavirus variant.

  • While futures dropped, traders also monitored a rise in tensions between Iran and the U.S. Washington has formally blamed Tehran for an attack on an Israel-linked oil tanker, warning of an appropriate response. 
  • The standoff comes as the two nations are seeking to revive a nuclear accord that, if successful, may pave the way for an end to U.S. sanctions on official Iranian oil flows. 
  • Oil has risen every month this year apart from March as the global recovery from the pandemic stoked consumption, although traders remain wary about the threat carried by the disease’s persistence. 
  • Against that backdrop, the Organization of Petroleum Exporting Countries and allies have largely followed through with plans to ease supply curbs, with an extra 400,000 barrels a day to be released this month 
  • Also, WTI Crude dropped 1.04% on Sunday evening to trade at $73.18 per barrel, Natural gas recorded a 1.18% gain in price to trade at $3.960. Meanwhile, Bonny Light traded in a positive region at $74.32 per barrel, representing a 0.27% gain. 

External reserve 

Nigeria’s foreign reserve increased by $26 million on Thursday, 29th July 2021 to close at $33.381 billion compared to $33.355 billion recorded as of 28th July 2021. 

  • Since the reserve started moving positively it has gained over $287.1 million in just 10 days despite enduring a significant plunge in the previous months. 
  • Recall that the Central Bank of Nigeria banned the sales of foreign exchange to Bureau De Change (BDC) operators in the country, due to reports of the operators’ illegal trading of the dollar, trading beyond the limit threshold of $5,000 and gradually dollarizing the Nigerian economy, according to the CBN governor. 
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