- CBN’s policy on Form-M’ll hinder trade facilitation –ANLCA
FMDQ Exchange has declared that total FX market turnover on its platform rose by N4.20 trillion ($10.82 billion), representing a month-on-month (MoM) increase of 25.38 per cent ($2.19 billion) in July 2020 from the turnover recorded in June 2020 $8.63 billion (N3.34 trillion).
According to data obtained from the exchange’s website, turnover on the Fixed Income and Currency (FIC) markets for the month ended July 30, 2020 was N18.72 trillion, indicating a MoM increase of 13.66 per cent (N2.25 trillion) from the turnover recorded in June 2020 (16.47 trillion).
This represents a year-on- year (YoY) decrease of 14.43 per cent (N2.36 trillion) from the turnover recorded in July 2019 (N16.36 trillion). As at July 29, 2020, year-to-date (YTD) turnover was N136 trillion, representing a YoY increase of 0.30 per cent (N0.41 trillion) on the YTD turnover of N135.58 trillion recorded in July 2019.
Also OMO bills and money market transactions (Repurchase Agreements [Repos] & Unsecured Placements/Takings) remained the highest contributors to the FIC markets in July 2020, jointly accounting for 60.16 per cent of the total FIC market turnover.
Analysis of FX market turnover indicates that FX Derivatives accounted for 70.32 per cent ($1.54 billion) of the total MoM increase in FX market turnover in July 2020. In the OTC FX Futures market, the near month contract5 (NGUS JUL 29 2020) with a total outstanding notional value of $1.37 billion matured and was settled, whilst a new long-term (60-month) contract, NGUS JUL 30 2025 was introduced at a rate of $/N581.52.
The total notional value of open OTC FX Futures contracts as at July 29, 2020 stood at $12.69 billion, representing a 3.64 per cent ($0.48 billion) decrease on the value of open contracts as at June 30, 2020 ($13.17 billion), and continuing the downward trend in the value of open contracts since May 2020, while the total notional value of OTC FX Futures contracts traded since inception stood at $48.85bn as at July 29, 2020
On July 7, 2020, the Central Bank of Nigeria (CBN) Official Spot US$/N exchange rate closed at $/N381.00, representing a decrease of $/N20.00 (5.54 per cent) in the Official Spot FX rate compared to the closing rate of $/N361.00 as at July 6, 2020.
This represents the first $/N FX rate devaluation by the CBN since March 20, 2020, when the Official Spot FX rate was adjusted to $/ N361.00 from $/N307.00. Consequently, the CBN Official Spot FX rate closed at an average of $/N377.19 in July 2020, representing a decrease of 4.48 per cent ($/N16.19) from $/N361.00 recorded in June 2020.
Meanwhile, the Association of Nigerian Licensed Customs Agents (ANLCA) has raised the alarm that the recent ban imposed by the Central Bank of Nigeria (CBN) on third party arrangement will hinder trade and reduce the volume of import coming into the country.
According to the Association, there is need for CBN to critically look into its directives on Form-M to avoid the return of pre-shipment destination inspection at the nation’s ports.
Speaking yesterday at a media briefing in Lagos, Vice President of ANLCA, Kayode Farinto, lamented that the ploy by the CBN to ban third party arrangement on Form-M will end up taking away jobs from Nigerians.
He added: “The CBN issued a statement recently banning third party participation in Form-M issuance. This was disclosed in a circular dated August 24,2020.
“The CBN said that to ensure prudent use of foreign exchange resources and eliminate incidences of over-invoicing, transfer pricing, double handling charges, and avoidable costs that are ultimately passed to the average Nigerian consumers, thus eradicating third party involvement in Form-M.” According to him, whoever signed the circular does not have the interest of Nigerians at heart because what the policy means is that there won’t be third party involvement in Form-M again.
