Bank Returns Reveal Increased Forex Allocation to Manufacturers

Trading by banks on behalf of their clients on the Nigerian Interbank Foreign Exchange (NIFEX) has shown increased foreign exchange (forex) allocation to the importation of raw materials and industrial machines by manufacturers.

A review of the returns on forex utilisation and source of funds for the week ended July 1, 2016, which was published by some commercial banks last week, revealed an increase in the volume of forex allocations to the sector.

For instance, Zenith Bank Plc’s returns on forex utilisation which put the volume of its transactions at $115,066,665.95 showed that it transacted business with a total of 434 customers.

Most of them were corporate customers who bought the greenback from the bank for the importation of industrial raw materials and spare parts, among others.

Also, Diamond Bank Plc sold the $42,158,753 it purchased from the NIFEX to 184 of its customers, mainly for the importation of pharmaceutical raw materials, raw materials for construction, agricultural machinery, cement silos for stationary block making, and importation of motorcycles in completely knocked down (CKD) parts, among others.

Diamond Bank’s returns on source of funds also showed that it purchased $42,210,497 from the market.

Similarly, Union Bank Plc’s returns put the volume of forex transactions by the bank at $142,118,110.69. The bank transacted business with 238 customers and details of the transactions showed that forex was sold for raw material imports, personal income remittances and payment of school fees, among others.

Stanbic IBTC Limited’s returns on forex utilisation also showed that it transacted business with 315 customers who bought dollars to import raw materials and for divestments, among others, just as the bank’s returns on source of funds put the amount of dollars it purchased at $51,761,247.42.

Also, FirstBank Nigeria Limited’s returns on forex utilisation showed that its Secondary Market Intervention Sales (SMIS), which was from the Central Bank of Nigeria’s (CBN) special intervention was $26,601,760.48. The bank sold dollars to 139 customers, most of whom were importers of industrial raw materials as well as for petroleum products importers.

While First City Monument Bank Limited’s returns showed that it sold the greenback to 515 customers, its returns on sources of funds put the total amount the bank purchased from the market at $24,140,048.

Meanwhile, in furtherance of its efforts to engender transparency and professionalism in the forex market, the CBN at the weekend directed that all forex-related trades by authorised dealers (banks) and corporate institutions in the forex market, with effect from August 1, 2016, must be executed through the FMDQ-advised forex trading auction and surveillance system.

The central bank gave the directive in a one-page circular that was signed by its Director, Financial Markets Department, Dr. Alvan E. Ikoku, a copy of which was posted on its website.

“All authorised dealers (banks) are expected to execute all forex-related trades among themselves and with their clients (corporate institutions) through the FMDQ-advised forex systems.

“The deployment of the FMDQ-advised FX systems will only be to those corporate clients that have been screened and pre-approved by the FMDQ in line with its on-boarding eligibility criteria,” it explained.

The central bank also instructed all authorised dealers and corporate institutions in the forex market to ensure strict compliance.