The CBN’s move against abuse of FX: Our thoughts

Must Read

How To Block Your Bank Account And SIM Card In Case Of Emergency

Losing your phone and wallet or having them stolen can be very frustrating. However, in case that happens to...

List of Mobile Banking USSD Codes For All Banks in Nigeria and how to use them

The introduction of USSD codes (Unstructured Supplementary Service Data) has changed the Nigerian banking system completely. Today, mobile banking...

Ogun State Resumes Monthly Environmental Sanitation this Saturday

After a long break due to COVID-19 pandemic, the Ogun state government says the monthly Environmental sanitation exercise will...
- Advertisement -

The Central Bank of Nigeria (CBN) recently directed Authorized 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, with immediate effect.

Furthermore, CBN announced that it will immediately introduce the usage of the Product Price Verification Mechanism (PPVM) to verify quoted prices of goods and services before approving Form M.

Clearly, this is a major move against abuse of FX market activities especially by entities which take advantage of their huge FX need for overpricing and conduit for arbitraging.

The CBN's move against abuse of FX: Our thoughts
Sources: FMDQ, AbokiFX, United Capital Research

The new directive will be a major shift for most of the multinationals and large local manufacturers, especially in the FMCG space, with huge FX needs. We understand that most of them have related-party procurement agents in Europe or Asia who purchase raw material, machinery, equipment, etc. on their behalf. Certainly, the previous structure provides an avenue for abuse, but it is the structure they are used to.

- Advertisement -

Hence, we expect some form of pushback, especially as the circular was silent on what will happen to Form M opened prior to now, that does not conform to this new policy.

Read Also:  Publiseer Qualifies For The Finals of Africa's Young Entrepreneurs Program

In the absence of an exception to key players, the parallel market is likely to witness further pressure. So, we imagine that the CBN may be open an engagement with key manufacturers to reach an amicable agreement. Still, this may further pressure parallel market rates in the interim amid the neverending speculative attacks on the local unit.

United Capital Research

- Advertisement -
The CBN's move against abuse of FX: Our thoughts - Brand SpurThe CBN's move against abuse of FX: Our thoughts - Brand Spur
- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

The CBN's move against abuse of FX: Our thoughts - Brand SpurThe CBN's move against abuse of FX: Our thoughts - Brand Spur

Latest News

Movies To Watch For Black History Month

It’s the last week of black history month and it feels like this month we had plenty of movies...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -The CBN's move against abuse of FX: Our thoughts - Brand SpurThe CBN's move against abuse of FX: Our thoughts - Brand Spur