In the wake of unprecedented foreign exchange challenges, several banks in Nigeria have ceased providing forex services to their customers, leaving many in the lurch. The move comes as demand for Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) dwindles following the Central Bank of Nigeria’s decision to unify exchange rates in the country, making obtaining foreign currency a more costly endeavor.
The forex crunch has forced major banks, including Tier 1 institutions, to halt their PTA and BTA services due to a severe shortage of the US dollar. Customers with pending requests are facing delays and uncertainty as they wait for access to the much-needed foreign currency.
One source within a prominent Tier 1 bank, who wished to remain anonymous, confirmed the dire situation, stating, “We have stopped giving out PTA and BTA because we don’t have enough US dollars. We still have a significant backlog of requests that we have been unable to fulfill.”
Another source, who was not authorized to speak on behalf of their bank, highlighted the impact of the Central Bank’s decision to unify exchange rates, stating, “Since the exchange rates were unified, we now sell at rates similar to the black market rate. We don’t have the forex to distribute at the moment, but when we did, we sold at rates above the closing I&E window. The demand has dwindled significantly, even though we still have numerous unmet requests.”
This forex crisis comes on the heels of the Central Bank of Nigeria’s move to implement a free float of the national currency against the US dollar and other global currencies in June. In its subsequent report, titled ‘Understanding the operational changes to the foreign exchange market,’ the banking regulator revealed its decision to consolidate all segments in the FX market into the Investors’ and Exporters’ (I&E) window, rendering all other windows obsolete.
According to the Central Bank, the I&E market operates on a willing buyer, willing seller system, where entities seeking foreign exchange connect with those willing to sell at an agreed price through an authorized dealer. Under this model, exchange rates are mutually agreed upon by both parties involved.
Despite these changes, the Central Bank maintained that PTA, BTA, and other invisible transactions would continue to be accessed through banks at prevailing market rates. However, the current scarcity of US dollars has left many banks unable to meet the forex demands of their customers, creating an unsettling situation for those in need of foreign currency for travel and business purposes.
As Nigeria grapples with these forex challenges, both banks and customers are left hoping for a resolution to the ongoing foreign exchange crisis that has disrupted the country’s financial landscape.
