Items Not Valid for Foreign Exchange (FX) in the Nigerian FX Markets

The directive exempts certain imported goods and services from the list of articles eligible for access to FX in the Nigeria Foreign Exchange in order to promote and support the local production of these items in the country.

The implication of this development is that importers wishing to import any of the items listed in the aforementioned CBN Directive would be bound to (Interbank Market and BBN Intervention).

The list of affected items is described below, but may be revised as need arises. However, please note that importing these items is not prohibited.

Items include the following:

Rice

Cement

Margarine

Palm Almond / Palm oils / Vegetable oils

Meat and processed meat products

Processed vegetables and vegetables

Chicken, eggs, turkey poultry

Private airplanes / jets

Indian Incense

Canned fish in sauce (Geisha) / sardines

Cold-rolled sheet steel

Galvanized steel sheets

Sheets of coverage

Wheelbarrow

Head trays

Cases and containers made of metal

Enamelware

Battery Steel

Steel tubes

Wire wires (deformed and non-deformed)

Reinforcement iron and bard bars

Wire Mesh

Stainless Steel Nails

Safety wine and razor

Panels and panels made of wood in pieces

Wood fiber panels and boards

Panels and panels made of plywood

Wooden doors

Toothpicks

Glass and glass products

Cooking utensils

Dishes

Glazed and ceramic tiles

Textiles & Leather Products

Fabrics

Clothing & Accessories

Plastic and rubber products, polypropylene granules, cellophane wrappings

Soaps and cosmetics

Tomatoes / Tomato Paste

In our opinion, we understand Stock Purchases (item 40 in the list) referring to Nigerians who access the foreign exchange market to invest in foreign securities and not foreign investors who enter funds in Nigeria for investment purposes.

The CBN stated that this was in an attempt to maintain the stability of the foreign exchange market and ensure the efficient use of foreign exchange by encouraging the local production of these units. CBN also clearly stated that importing such items is not prohibited, however importers of such items must do so using their own funds without resorting to the foreign exchange markets of Nigeria.

The implication of this is that there will be Reduced Demand in the official market, which means a reduced pressure on the official FX market. However, there will be more pressure on the parallel market (Bureau de Change). The difference between the parallel and the official market will widen and the dollar rate in the parallel market will increase. This will also lead to an increase in the cost of these items locally for consumers and ultimately inflation.



Source by Richard Chijioke Chukwunagorom

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