- The Central Bank of Nigeria has continued its effort to stabilise the naira against the dollar at the foreign exchange market
- The latest move is the introduction of a foreign exchange price verification system for importers
- Analyst who spoke to Legit.ng explained that the portal could be a game-changer if it is done right
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The Central Bank of Nigeria (CBN) has launched a price verification system (PVS) portal for importers buying foreign currencies.
The apex bank disclosed this in a Trade and Exchange Department circular on Thursday, August 17, 2023, Punch reports.
The system will go live on Thursday, August 31, 2023, enhancing transparency in forex transactions.
It will provide details regarding how customers can acquire foreign currencies and at what exchange rate.
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The CBN statement reads:
“Following the successful conduct of the pilot run and various trainings held with all the banks, the Central Bank of Nigeria hereby announces the Go- Live of the Price Verification System (PVS),” the statement reads.
“All applications for Forms M shall be accompanied by a valid price verification report generated from the price verification portal.
“For the avoidance of doubt, by this circular, the price verification report has become a mandatory trade document precedent to the completion of a Form M.
The apex bank also noted that the system is mandatory for accessing forex through the official window and urged all authorised dealers to inform their customers of the development while warning that cases of infractions would be appropriately sanctioned.
“Please, ensure compliance."
CBN forex decisions
The country regulatory bank has consistently argued that it does not believe that the market forces cause naira depreciation.
“The president is very concerned about some of the goings-on in the foreign exchange market. One of the things we discussed was what could be done to stabilise.
“I do not believe that the changes going on in the parallel market are driven by pure economics demand and supply, but I topped by speculative demand by people."
With the implementation of the new price verification system, the CBN hopes to limit the chances of sharp practices and tricks used to buy cheap dollars in banks at the official rate and sell them on the black market.
Reacting to the development in an interview with Legit.ng Prof Uche Uwaleke, Professor of Capital Market at the Nasarawa State University and President Capital Market Academics of Nigeria noted that the FX verification portal will provide CBN with the necessary tool to checkmate sharp practices in the forex markets.
"The Price Verification System portal is a good development and will help provide CBN the tool to checkmate the unfortunate tendencies of importers to inflate invoices for the purpose of hiking their foreign currency demand.
"If well implemented, it will go a long way in stopping round-tripping- where an importer can easily buy dollars at the official rate and resell them at the black market rate for more profits.
Also, Kalu Aja, a personal finance consultant, explained that the system was created to stop importers from using imports to take dollars out of the economy.
He was, however, not convinced that the CBN has to monitor importers.
"The Price Verification System portal was introduced to stop importers from using imports to take dollars out of the economy.
"However, considering that we have an open market where buyers and sellers willingly participate, why do we find ourselves in a position of having to explain our FX actions to the CBN?"
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"This seems to be a bureaucratic process. The CBN should ideally focus on other matters such as monetary policy, the ban on the 42 listed items.
Also, it is important that the CBN make the official market (I&E window) accessible to everyone."
Nigeria’s debt stock hits N82 trillion amid CBN's naira devaluation
Meanwhile, in another report, Legit.ng reported that Nigeria’s public debt had risen to N82 trillion from N77 trillion before the Central Bank of Nigeria (CBN) exchange rate unification, announced on Wednesday, June 14, 2023.
According to a press release by the CBN, all exchange rate windows are collapsed into the Importers and Exporters (I&E) window, showing a merger of the multiple exchange rates.
The unification has seen the naira fall to N664 per dollar and has attracted severe consequences for the nation’s economy, including a spike in public debt.