By Babajide Komolafe
As Interbank interest rate crashes to 13%
LAGOS â€” THE Central Bank (CBN) yesterday imposed new foreign exchange restrictions on travellers even as interbank interest rate fell by 40 per cent.
In a circular signed by the Acting Director, Trade and Exchange department entitled: â€œJoint Purchase Of Business Travel Allowance (BTA) And Personal Travel Allowance (PTA)â€, the CBN banned joint purchase of foreign exchange for BTA and PTA.
The circular stated, â€œIn the continued effort to meet legitimate foreign exchange demand in the market, Authorised Dealers, Class â€˜Aâ€™ Bureau de charge operators and the general public are hereby informed that with effect from the date of this circular, travellers on business trip who are entitled to BTA can no longer buy PTA while on the same trip and vice versa. Consequently, this circular supercedes the provisions of paragraph (ii) of the circular ref. No. TED/FEM/FPC/GEN/01/112 dated September 14, 2007. Please ensure compliance failing which appropriate sanctions shall apply.â€
The present foreign exchange rule allows a maximum of $5000 per quarter for BTA and $4000 per quarter for PTA. Previously, a traveller especially on business trip can apply for both and buyÂ $9000 per quarter. Consequently, this restrictions reduces by half the amount of foreign exchange allowed for such traveller.
Meanwhile, banksâ€™ treasurers heaved a sigh of relief yesterday as interbank interest rate fell by 40 per cent to 13 per cent following the influx of N330 billion statutory allocation funds.
It would be recalled that for the past two weeks, the interbank money market was gripped by severe scarcity of funds which pushed cost of funds to the 22 per cent, the maximum limit allowed by the interest rate ceiling by the CBN.
The influx of the statutory allocations funds however brought an end to the scarcity bringing down interest rate significantly in the market. Investigations revealed that interest rate on overnight lending dropped to 14 per cent from 22 per cent while interest rate on seven days lending dropped to 18.25 from 21.67 per cent. Also interest rate on 30 days dropped to 19.08 from 21.5 per cent.
Money market operators explained to Vanguard that the development further showed the dependence of the banking industry and indeed the economy on operation liquidity.