This is a result of the Central Bank of Nigeria’s directive authorizing dealers to only open Forms M (a mandatory statutory document to be completed by all importers in Nigeria) for payments in favour of the ultimate supplier of the product or service.
The exchange rate between the naira and the US dollar (Naira to dollar exchange) for Wednesday, August 26th 2020, stood at ₦477/US$1 in the parallel market. The rate has been stable at ₦477/ US$1 since last week Thursday, 20th August 2020.
With the commencement of international flights, however, the reprieve may come to the local currency and it may get strength against the greenback.
A parallel market operator in Ibadan told Tribune that the “commencement of international flights may signal a good omen for the naira as those coming into the country will bring in dollar and other foreign currencies. This will firm up the naira.”
As part of its efforts to save the local currency, the apex bank announced recently that it would immediately introduce the use of Product Price Verification Mechanism (PPVM) to verify quoted prices of goods and services before approving Form M.
Industry players said this is a major move against abuse of foreign exchange (FX) market activities especially by entities which take advantage of their huge FX need for over-pricing and conduit for arbitrating. According to analysts at United Capital Limited, these importers quote high prices to enable them get more forex from CBN and then bring back the excess to sell at the parallel (black) market.
“This may further pressure parallel market rates in the interim amid the never-ending speculative attacks on the local unit,” the United Capital’s analysts feared. The new directive, according to stakeholders, will be a major shift for most of the multinationals and large local manufacturers who may be innocent of the abuses, especially in the Fast-moving consumer goods (FMCG), space, with huge FX needs.
Meanwhile, the exchange rate between the naira and the British pound sterling stood at ₦590/₤1 on Wednesday 26th August, as against ₦585/₤1 recorded on Tuesday 25th August 2020. Also, the exchange rate at the parallel market between the naira and the European euro stood at ₦552/€1 on Wednesday, 26th August 2020. The exchange rate had also closed at ₦552/€1 on Tuesday 25th August 2020.
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