seunmsg:
Good decision to lift the restriction on forex deposit, it's long overdue. The decision to stop providing forex to BDC's will only profit the deposit money banks. It's not in the overall interest of the country. Getting and exchanging forex will become more difficult and in the long run, dollars will become more expensive.

The resultant job loss as a result of this decision cannot be imagined. The BDC's decision should be reviewed and reversed. It's not a good decision.

seunmsg:
Good decision to lift the restriction on forex deposit, it's long overdue. The decision to stop providing forex to BDC's will only profit the deposit money banks. It's not in the overall interest of the country. Getting and exchanging forex will become more difficult and in the long run, dollars will become more expensive.

The resultant job loss as a result of this decision cannot be imagined. The BDC's decision should be reviewed and reversed. It's not a good decision.

Bevista:
I think the CBN position is appropriate in the prevailing circumstances. They have sacrificed the BDCs for the greater economic good of the whole country. This move will give the Bank some breathing space, as calls for devaluation will now be dampened
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However, if you read the full text of the CBN press statement (link below), you will see the CBN stating that Nigeria is the only country in the world where the Central Bank sells dollars to dealers. The Bank also accused the BDCs for exploiting price arbitrage to round-trip the sold dollars. The CBN also notes that the number of BDCs has risen exponentially as operators try to access "cheap" dollars resulting to over $6bn demand annually.
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As for the job losses in BDCs, the CBN is trying to save many more job losses that would occur from other sectors if they continue the current policy.
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http://www.cbn.gov.ng/Out/2016/CCD/Press%20Release%20-%20CBN%20to%20stop%20Dollar%20Sales%20to%20%20BDCs%20January%202016.pdf

Caracta:
Just deposit restrictions lifted? I don't even understand. Do they want to mop up cash with BDCs? Will there be outflow?

fulanimafia:
Without BDC's, where would Nigerians easily get the forex to deposit in the first place?

There is however no doubt that this move would ease pressure on forex demand which would ultimately help the recovery of the Naira....which is the ultimate aim.

Carry go.

fulanimafia:
Without BDC's, where would Nigerians easily get the forex to deposit in the first place?

There is however no doubt that this move would ease pressure on forex demand which would ultimately help the recovery of the Naira....which is the ultimate aim.

Carry go.

BIGTinfotech:
A welcome development. Now business can continue.
*sighs*

Little wonder what Largarde came to do.

Ymodulus:


It sounds like a conspiracy theory. But I see your point of view dear and I think that'd what they want to do

Abbeyme:


Exactly whats on my mind...

Largarde's mission wasnt in vain afterall...

seunmsg:
Thanks for link, i just finished reading the full press statement by CBN. Truth be told, the DMB's are also guilty of almost all the allegations levelled against the BDC's. With this decision, we are all at the mercy of the DMB's as far as forex is concerned. So, can CBN effectively monitor these banks to ensure that they play strictly by the rules? Considering Emefiele's background as a former Zenith bank MD, I doubt if he can really come down very hard on any erring bank. He's part of them and can't be trusted.

Going forward, CBN should just ban the operations of the BDC completely, at least, for now. Allowing them to still operate while not selling forex to them will be counterproductive. Those guys will find a way to sabotage the system in connivance with the DMB's to survive. Round tripping will be at the highest level. It's just like CBN's earlier decision to stop providing forex for about 43 items without completely banning their importation. The importers of those items still found a way of getting forex locally to import them and thereby pushing the exchange rate very high. In the long run, I hope this decision will pay off.

Adesiji77:


"The witch cried yesterday..."

Cc: BIGTinfotech

fulanimafia:
Without BDC's, where would Nigerians easily get the forex to deposit in the first place?

There is however no doubt that this move would ease pressure on forex demand which would ultimately help the recovery of the Naira....which is the ultimate aim.

Carry go.

Bevista:
@ the bolded. The essence of excluding those items was not to immediately stop importation, it was to conserve FX Reserves by pushing those importers to source FX from the parallel market instead of the official rate.
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Quite frankly, I don't expect most people to buy FX directly from DMBs. Most people are going to buy from BDCs/Abok!s and then deposit same in their domiciliary accounts, so I don't see the DMBs playing a big role on the retail end. They are probably going to be more active at the institutional and interbank levels.
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The key now is for CBN to effectively monitor these banks to ensure that Dasuki yam eaters do not use the opportunity to transfer these yams out to their offshore barns.

seunmsg:


[b]The resultant job loss as a result of this decision cannot be imagined. [/b]The BDC's decision should be reviewed and reversed. It's not a good decision.

Caracta:
Just deposit restrictions lifted? I don't even understand. Do they want to mop up cash with BDCs? Will there be outflow?

seunmsg:
The problem we are facing at the moment is the inadequacy of our forex earnings to meet our importation requirement. So, we have only two possible solutions. We either find a way to increase our forex earnings or find a way to considerably reduce our importation.

Increasing our forex earning in the short term is almost impossible since we are not exporting any major commodity apart from crude oil whose price is currently down. So, we are left with the second option of reducing importation. CBN said they won't provide forex for 43 items but the importers can get the required forex from the parallel market. So, what's the effect of sourcing forex from the parallel market? Increase in the exchange rate.

I am not an economist but I think the decision makers at CBN should work towards finding a way to discourage importation in the short time. That's the only way to help the naira.

Bevista:
The CBN has made the right call in the prevailing circumstances. I had consistently maintained that the strict controls will have unintended consequences.
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This move will give the CBN some breathing space and dampen calls for devaluation. This will lead to some inflation, but it's a price that has to be paid to prevent a full blown economic crisis.
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The CBN monitoring & compliance team should watch the banks like Hawks to prevent illicit outflows.