- Moves to tighten noose against FX round tripping
By Obinna Chima
In line with its determination to boost dollar supply in the economy as well as to bridge the wide gap between the interbank foreign exchange (FX) market and the parallel market, the Central Bank of Nigeria (CBN) yesterday pegged the Naira exchange rate for payment of school fees (strictly universities) abroad and Personal Travel Allowance (PTA) at N375 to the dollar.
The central bank disclosed this in a closed-door meeting it held with all chief executive officers of commercial banks as well as other authorised FX dealers in attendance. The meeting took place in Lagos.
A source who was at the meeting said the new rate for school fees and PTA would become effective from Monday.
According to the source, the CBN Governor, Mr. Godwin Emefiele who chaired the meeting, assured that the central bank would provide enough dollars to meet all FX demands for these invisible items.
“For tuition fees, the CBN said it would only cater for those in the universities and the persons involved can only get $15,000 per term and the FX would be wired directly to the school abroad. We (the banks) were all told to ensure compliance and that heavy sanction awaits any authorised FX dealer that flouts this rule,” the source added.
THISDAY also gathered that applicants for FX for tuition fees must have tax clearance certificates and Bank Verification Number.
The move, according to another source is to drastically reduce FX round-tripping which appears to be one of the factors responsible to the wide gap between the interbank FX market and the parallel market.
On the other hand, for PTA, the source said: “People are entitled to PTA only if their flight(s) is not less than five hours and they are only entitled to $4,000 per quarter.
“The CBN has also undertaken to provide enough dollar liquidity to see these through.”
Emefiele had while making a presentation to members of the National Executive Council (NEC) on Thursday appealed for patience, saying that the CBN was working on halting the widening gap between the interbank FX market and the parallel market.
The NEC members had generally expressed concern over the current situation of the exchange rate and called for an urgent review of the current forex policy, especially the gap between interbank and the parallel market rates.
But Emefiele sued for patience and understanding, assuring that the situation was being closely managed.
Meanwhile, the Naira maintained its value of N516 to the dollar on the parallel market yesterday.