The Central Bank of Nigeria (CBN) has announced new rules governing how travellers can access foreign exchange, as the Nigerian currency the Naira continues to weaken against the US dollar.
According to the latest official data, the Naira dipped again on Tuesday, closing at ₦1,454.38 per dollar, down from ₦1,448.43 at the start of December continuing a seven-day slide in value. On the parallel market, the currency also lost value, dropping to ₦1,483/$1 from ₦1,480 the previous day. The depreciation has been attributed to tight foreign exchange (FX) liquidity, alongside rising demand as businesses stock up for the festive season and pending year-end FX obligations.
In response, the CBN released updated guidelines for travellers wishing to obtain foreign currency under the Business Travel Allowance (BTA) and Personal Travel Allowance (PTA). Under the new framework, up to 25 per cent of a traveller’s approved FX allowance can be given in cash; the remaining 75 per cent must be loaded onto a prepaid card. Beneficiaries must complete documentation and verify their travel before receiving funds.
The guidelines also cover access to foreign currency for medical or educational expenses abroad. For instance, Nigerians seeking medical treatment overseas can get up to US$5,000 from a Bureau De Change (BDC), while payments for foreign school fees are also catered for subject to presentation of valid documents.
The announcement comes at a time of notably low FX inflows. Data shows that Nigeria recorded only US$2 billion in FX inflows in November the lowest in 16 months significantly down from US$6.1 billion in October. The drop in inflows exacerbates pressure on the Naira even with interventions by the central bank.
Analysts have warned that continued liquidity constraints and heightened demand from imports, medical and educational overseas payments may keep the Naira under pressure. The new cash/card rules from the CBN are aimed at improving transparency and controlling dollar outflow, but many believe more comprehensive measures may be needed to stabilise the currency.
The CBN’s fresh rules for BTA/PTA access mark the latest attempt to bring discipline to the FX market. Whether they will be enough to reverse the trend of Naira depreciation remains to be seen especially as demand for dollars rises during the holiday season and FX inflows remain weak.
