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Nigerian banks increase cap on international spending, as FX liquidity surges

This news would surely be a cheer for bank customers travelling abroad.

Commercial banks in Nigeria have increased the limit on international dollar spending via point of Sales (PoS) and online platforms by 900%.

Guaranty Trust Bank (GTBank) in an email sent to customers on Tuesday, July 12, 2017, noted that its customers with its Naira MasterCard can now spend up to $1000 using the card during international transactions.

“We write to inform you of the monthly spending limits currently applicable when using your GTBank Naira MasterCard for International payments”. A further part of the email noted that the increase of $100 to $1000, representing a 900% increase.

This move according to Financial and Money Market analysts was triggered by the continued interventions of the Central Bank of Nigeria (CBN) in the forex market, which have reduced foreign currency pressure on many banks.

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Olakunle Ezun, Head of Treasury at Ecobank Nigeria also stated that there has been an improvement in the business environment for banks, especially in the foreign exchange market due to the CBN FX market interventions.

“A lot of banks have improved liquidity. We’re returning to the pre-crisis era when access to the dollar was not restricted. The CBN has settled a lot of outstanding dollar obligations which affected banks’ positions”, he said.

Fitch Ratings also remarked that the FX liquidity of Nigerian banking industry has improved due to the Investors’ and Exporters’ Forex (IEFX) window introduced in April 2017 by the CBN.

The prowess of the IEFX window has also been a topic at major investment fora about Nigeria across the world.

The FMDQ OTC Investors’ meeting held recently also noted that the window has eased many of the foreign related challenges of investors in Nigeria. This has also been said to be the major trigger for the return of Foreign Portfolio Investors (FPIs) to the Nigerian Stock Exchange (NSE).

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With the IEFX window being driven by the market mechanism, it shows that the CBN  would have to consider relaxing some of its control on the market while sustaining its intervention drive.

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