The requirement for bank verification number (BVN) as condition for foreign exchange transactions at Bureau de Change (BDC) may invariably strengthen naira value at the parallel market to close the gap between official interbank and parallel market exchange rates.
Tightening regulation, the Central Bank of Nigeria (CBN) had Thursday issued a statement mandating banks and licensed BDCs to demand the BVN before selling forex to their customers.
The result is that some buyers are now bye passing BDC operators to source dollars elsewhere, our checks on Friday revealed.
However, this development is yet to impact on value positively as parallel market rate declined in favour of the dollar which exchanged N231/$1.
However, a dealer told TheNiche that naira looks set to appreciate because dealers did not notice demand pressure for dollars on Friday as it used to be on weekends.
Expectations that the development may strengthen the local currency became reinforced after members of the national assembly kicked against linking BVN requirement with BDC transactions.
The law makers, on Monday, told CBN not to extend the regulatory guideline to this segment of the foreign exchange transactions.
However, a circular by the apex bank on Thursday previous week stated that “The adoption of BVN as a condition for the purchase of FOREX is expected to reduce the incidence of multiple purchases, round tripping and illicit transfer of funds.
“It facilitates enforcement of authorised limits of forex sales to end users, sanitise the retail segment of the market and engender policies that will facilitate better allocation of forex, based on genuine demands,’’ CBN stated.
To address the concern by the law makers, the CBN said on Tuesday that discussion with the law makers had commenced.
According to CBN Director, Banking Payment Systems, Dipo Fatokun, the fear to submit BVN which has to do with proper identity cannot be expressed by those who will want to do legitimate business.
“If BVN has to do with identity, why should anybody hide his identity if he has nothing to hide?,” said Fatokun,” Fatokun wondered.
“We’re discussing with them. Those who actually want to procure $5, 000 or less will not have problems with submitting their BVN where it is required.
“We believe that those who will not want to give their BVN at BDCs are probably those that will want to buy $100, 000 or $1million and for businesses that are not legitimate. That is the fear,” said Fatokun.
The tightening regulatory measures notwithstanding, Naira on Friday depreciated further at the parallel market as buyers of forex boycotted BDCs.
The naira on Friday afternoon lost N4 to the dollar as it exchanged for N231 to the dollar as against its previous value of N227.
Bit it remained stable at N197 to the dollar at the official interbank window.
