Banks tinker with FX sale templates, set new operating rules
•Dollar sells for N718 on P2P platforms as scarcity worsens
‘Approval is no longer a guarantee for fund disbursement’
Deposit money banks (DMBs) are tweaking subsisting services, internal processes and operational guidelines to ease foreign exchange demand pressure.
This comes on the back of rising demand and contracting supply of dollars across different market segments. Late yesterday afternoon, naira dropped against the greenback to an all-time high (ATH) of N718.4 at the peer-to-peer (P2P) platform. It exchanged for about N715/$, a band that was in force for days, earlier in the day, but lost the peg towards mid-day.
P2P exchange rates have been extremely volatile in the past few days with prices changing almost per second. The trading platforms are also beginning to witness the sort of speculative tendencies that have defined offline black market trading.
At the parallel market, the naira has also weakened significantly in the past week as the summer demand spike continues. As of yesterday, currency dealers, most of whom had run out of supply, were offering an average of N708 per dollar.
Meanwhile, banks’ selling rates are still pegged around N435/$. This puts the spread between the bank and parallel market rate at about N275 per dollar or 63 per cent. The last time the market witnessed such a wide differential was in the 1990s – during the military regimes.
To cope with the rising pressure, banks have been tweaking their subsisting rules and service offerings. Just yesterday, an old generation bank sent an email stopping different forms of naira debit/credit cards for international transactions.
“Due to current market realities on foreign exchange, you will no longer be able to use the Naira MasterCard, Naira Credit Card, our Virtual card and Visa Prepaid Naira card for international transactions. This will take effect on 30 September 2022. Please use your Visa Debit Multicurrency Card, Visa Prepaid (USD) Card and Visa Gold Credit Card to continue transacting abroad with limits of up to $10,000,” the email seen by The Guardian stated.
The latest message came barely a week after the same stopped disbursing personal/business travel allowance (B/PTA) in cash.
“The full personal travel allowance (PTA) and business travel allowance (BTA) of $4,000 and $5,000 respectively will now be disbursed into your travel card. All applications will be in line with regulatory requirements. Kindly ensure that all PTA/BTA applications along with the approved Form A are submitted at the branch exactly 14 days before your proposed travel date. Sales are limited to two quarters a year.”
Another bank has extended FX request processing time to a minimum of six weeks, saying that will enable them to review applications in line with regulatory requirements.
“To serve you better, please be informed that we now require six to eight weeks to process your FX needs for international school fees, upkeep and medical payments. This will enable us to review your requests in line with regulatory requirements and ensure that we are able to source for FX to fulfill them,” one of the affected banks notified its customers.
As an increasing number of users end up not getting even after requests are approved, some banks have also emailed their customers, informing them that disbursement would only be based on availability after all.