Lagos - The Central Bank of Nigeria on Monday accused banks of buying and selling forex without following stipulated guidelines.
Acting Director, Trade & Exchange, W.D. Gotring, in a circular to authorised dealers titled: Re: Transactions in ‘Free Funds’ by Authorised Dealers’, accused banks of buying and selling forex without following stipulated guidelines.
“The CBN has noticed that some Authorised Dealers have continued to buy and sell foreign exchange referred to as ‘free funds’ despite the provision of the circular of March 4, 2004 on the subject,” he said.
He cautioned the lenders that their action is a breach of extant regulations. “Against the background, authorised dealers are to note that dealing in foreign exchange without appropriate documentation, which includes relevant entries, blotters, physical documents and non-disclosure to the Regulatory Authorities is a breach of extant regulations”.
He reiterated that as provided in the laws and regulations governing dealings in foreign exchange, authorised dealers shall not sell foreign exchange without appropriate documentation and disclosure to the regulatory authorities, irrespective of the source of the funds.
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“Accordingly, authorised dealers shall deal in eligible transactions only, and not engage in any foreign exchange transactions on terms inconsistent with the extant laws and or regulations,” he said.
The banks, further findings showed, are engaging in round-tripping, taking advantage of the huge forex gaps between the official and the parallel markets.
The naira on Monday closed at N305.50 to dollar in the interbank market, but was exchanging at N398 to dollar in the parallel market/ black market, hence creating huge temptations for greedy lenders to exploit. This structural defect is exploited by authorised dealers (banks) to make huge trading profits, but it weakens the naira.
- News 24