- Nigerians are now rushing to the black market for dollars and other foreign currencies following a new foreign exchange policy by CBN
- The new policy requires that buyers provide tax clearance certificates before they can access forex at the official rate
- The strict policy has been blamed for the rise in the demand for dollars in the black market
Many forex buyers have opted for the parallel black market to access dollars because of the zero documentation required to conclude transactions.
The rush for dollars at the black market comes following implementation of a new forex purchase law requiring buyers to present Tax Clearance Certificates to banks and other authorized dealers.
Lack of tax clearance certificate push buyers to the black market
With most buyers not possessing the required tax clearance certificates to buy at the official Investors and Exporters (I&E) window, the demand has now moved to the black market, where buyers are only required to have cash or make transfers.
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The strict forex purchase rules have made the black market a haven for forex transactions, especially with the declining gap between the official and the parallel market.
The Nation reports that the FMDQ Exchange portal showed a declining turnover at the official window, from almost $280 million daily to just $70 million and $90 million.
As of Friday, July 7, 2023, the transaction volume in the market stood at $73.4 million.
Bank send messages to customers, announcing new forex changes
The rising demand in the black market has been connected to the rigid forex request rules announced and implemented by banks, including the need for a tax clearance certificate for dollar purchases based on the directive of the Central Bank of Nigeria (CBN).
In an email to customers, one of Nigeria’s top-tier banks, Access Bank, said it would strictly adhere to the new forex directives by CBN.
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Access Bank said:
“Following our earlier communication regarding the CBN directive on Form A and Form Q applications, we write to inform you of the detailed requirements for Foreign Exchange (FX) transactions.”
“The Personal Income Tax Act now requires that individual applicants upload a valid Tax Clearance Certificate (TCC) on the Trade Monitoring System (TRMS) for requests including but not limited to: International School Fees Payment; Personal Travel Allowance (PTA); Personal Home Remittances (PHR); Medical Bill Payments; Accommodation payments; Upkeep payments and all other individual FX requests.”
According to the email, forex purchase applicants are also required to attach a bid instruction indicating their maximum preferable FX purchase rate and a timeline given to the Bank to source funds on their behalf.
Naira nears N800 to a dollar at the parallel market
The new guidelines have also pushed the demand for dollars in the black market to an all-time high.
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BusinessDay reports that as of Monday, July 10, 2023, the naira traded at N795 in the parallel market, lower by N1 to a dollar than the N794 exchanged on Friday, July 7, 2023.
At the Investor and Exports (I&E) window, the naira fell by 14.27% as the dollar was quoted at the N776 on Friday against the previous day to close at N762.63, per data from the FMDQ.
Naira Nears N800 per dollar as gap between official and parallel markets widens
Legit.ng reported that The naira traded for an average of N792.50 at the unofficial parallel market on Thursday, July 6, 2023.
According to reports, in some parts of Lagos, the dollar is quoted at N790 and N795 to a dollar.
The current rate is about 0.94% higher than N785 traded on Wednesday, July 5, 2023, leading to a naira depreciation against the US greenback.