Naira Drops As Banks Give Update on Tax Clearance For FX Demand

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As Nigeria’s deposit money banks (DMBs) inform their clients of regulatory requirements for tax clearance certificates for foreign currency transactions, the naira exchange rates on all FX markets somewhat declined.

The naira ended down slightly at N464.67 per US dollar from N464.50 at the Investors’ and Exporters’ foreign exchange window amid the new government initiative to unify the currency rate. Positively, the price of a dollar increased in the parallel market, rising 0.85% to N760 from N766. Forward rates for one month, three months, and one year came to N479.87, N506.00, and 557.74, respectively.

According to Cowry Asset Management Limited, currency rate changes at the forward market show gains of N1.93, N10.22, and N13.00. According to data from the foreign exchange market, the open indicative rate for the dollar on Wednesday ended at N464.10. Before it ended at N464.67 on Wednesday, the highest exchange rate ever seen was N467 to the dollar.

Within days of trade, the Naira fell to 460 to the dollar. On Wednesday, transactions in the official Investors and Exporters window totaled 163.74 million dollars. Nigerian deposit money banks said that clients wishing to purchase personal or business travel expenses would need to have a current tax clearance certificate.

The requirement is extended to all foreign exchange transactions as the Central Bank of Nigeria (CBN) continues to struggle to stabilise the exchange rate. Banks stated that a tax clearance certificate will be required to process, maintenance and upkeeps and medical allowance.

As a result of the new development, banks told customers that they would be required to upload current tax certificate clearance in addition to other documents on the CBN trade monitoring system (TRMS) for form ‘A’ request.

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