With the lingering foreign exchange (FX) scarcity across the country, strong indications at the weekend emerged that Deposit Money Banks (DMBs are facing huge pressure to meet customers’s demand

The development is taking a heavy toll on foreign tuition payment as well as businesses, leaving Nigerians frustrated. This has further led to increased patronage of the parallel market with many students (seeking admission in the United Kingdom, Scotland and others) reportedly purchasing FX from dealers ahead of the resumption of school activities.

The Central Bank of Nigeria (CBN) in its efforts to manage the forex market, had assured that PTAs and other invisible transactions would continue to be accessible through banks at the prevailing I&E window rate.

However, a recent survey showed that several commercial banks in Lagos are struggling to keep pace with the demand for forex, and in many cases, they simply have nothing to sell.

Daily Sun had reported that Nigerian banks informed their customers that they would only be able to access Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) once in two quarters.

Before this new development, the banks had been granting approval to travelers who applied once every quarter. The situation according to analysts is exacerbated by the massive disparity in official and black market values, which has now widened to N120/$1 in a matter of months since the unification of the exchange rates markets was announced.

This was as exchange rate disparity remained a major trigger for the introduction of the revised foreign exchange market forcing authorities to ease foreign exchange controls in mid-June to simplify its monetary regime.

However, the move appears to have led to heightened volatility in the black market, driven by strong demand from manufacturers, importers, students, and travelers.

Daily Sun investigations revealed that to meet their obligations, they regularly convert a significant portion of their income into dollars, further contributing to the limited supply available for all. As a result, the depreciation of the naira persists, and the outlook for forex volatility remains uncertain.

Several analysts who spoke to Daily Sun via emails shared their concerns that forex volatility may persist as more young Nigerians leave the country in search of better opportunities, a phenomenon colloquially known as “japa.”

During the last monetary policy committee meeting of the Central Bank, Acting Governor Folashodun Shonubi acknowledged that the ongoing forex volatility is primarily attributed to the limited supply of foreign currency.

He expressed optimism that once the supply issues are addressed, the volatility is likely to reduce.

“Some of the volatility you have seen over the period has been driven by that same fact that the market needs to find its level and also the reality that there is a pent up demand which current supply may not be sufficient for and as we ease and satisfy the pent up demand we will begin to see more efficient markets that runs.

So we expect that over time, sooner rather than later. The volatility will normalize. The role of the central bank is to intervene and keep the market at a fairly stable level. We have our views as to what that level is and as the market continues to oscillate around that level, if there is a need for us to intervene either by buying or selling, that is the role of the Central bank”, Shonubi said. (Daily Sun)

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