Several banks have suspended their forex services for customers due to challenges arising from the foreign exchange crunch, according to sources. The move follows a reduction in demand for Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) after the Central Bank of Nigeria (CBN) unified exchange rates, resulting in increased costs for obtaining foreign currency.
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A source from a Tier 1 bank, who spoke on condition of anonymity, revealed, “We have ceased providing PTA and BTA due to the scarcity of dollars. We still have a backlog of pending forex requests that we are unable to fulfill.”
Another source, not authorized to speak, mentioned, “Since the exchange rates were unified, we now sell at rates comparable to the black market. We are currently facing a shortage of forex supply. Previously, when we had availability, we sold at rates above the closing Investors’ & Exporters’ (I&E) window. However, demand has significantly decreased, despite the backlog of unmet requests.”
In June, following the initiation of the free float of Nigeria’s national currency against global currencies, the Central Bank released a report outlining changes to the foreign exchange market operations. The report indicated the integration of all market segments into the I&E window, with other windows being discontinued.
The I&E market operates on the principle of a willing buyer and willing seller, wherein entities with FX demand negotiate with those holding FX to agree on a price through authorized dealers, as outlined by the CBN.
The CBN clarified that PTA, BTA, and other invisible transactions would continue to be facilitated by banks at prevailing market rates.
As the banking sector navigates these forex challenges and adapts to the unification of exchange rates, the impact on customers and the broader economy remains a point of attention.
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