CBN introduces PVS portal to check Naira free-fall, as currency in circulation drops by N7.51bn

Central Bank of Nigeria (CBN) has introduced a foreign exchange price verification system designed for importers to gain access to foreign exchange (forex).

The introduction is said to be connected with the perceived free fall of the local currency, the naira in a space of one week, which has seen it dangle close to n1000/$1 in I&E foreign exchange market.

The bank in a statement from its Trade and Exchange Department said a price verification report from the portal is now mandatory for all Form M requests while it takes effect from August 31, 2023.

“Following the successful conduct of the pilot run and various trainings held with all the banks, the Central Bank of Nigeria hereby announces the Go- Live of the Price Verification System (PVS),”

“All applications for Forms M shall be accompanied by a valid price verification report generated from the price verification portal.

“For the avoidance of doubt, by this circular, the price verification report has become a mandatory trade document precedent to the completion of a Form M.

“Please, ensure compliance,” the bank said, as it urged all authorised dealers to inform their customers of the development, the CBN also said any case of infraction would be appropriately sanctioned.

.Meanwhile, in a related development, the total amount of currency-in-circulation in the country dropped from N2.6tn (N2,603,266m) as of the end of June 2023 to N2.59tn (N2,595,761m) as of the end of July 2023.

This is the first time the figure has dropped since February 2023.

Figures obtained from the CBN showed this represents a drop of N7.51bn in one month.

Currency-in-circulation is defined as currency outside the vaults of the central bank; that is, all legal tender currency in the hands of the general public and in the vaults of the Deposit Money Banks, according to the apex bank.

The CBN said that it employed the “accounting/statistical/withdrawals and deposits approach” to compute the currency in circulation in Nigeria.

This approach involved tracking the movements of currency in circulation on a transaction-by-transaction basis.

It said for every withdrawal made by a DMB at one of CBN’s branches, an increase in the CIC was recorded, adding that for every deposit made by a DMB at one of CBN’s branches, a decrease in the CIC was recorded.

The transactions are all recorded in the CBN’s CIC account, and the balance on the account at any point in time represents the country’s currency in circulation.

Prior to January 2023, the total amount of currency-in-circulation in the country dropped from N3.29tn as of the end of October 2022 to N1.38tn as of the end of January 2023 as a result of the naira redesign policy of the CBN.

Figures obtained from the CBN showed this represents a drop of N1.91tn in the three-month period.

The now suspended Governor, CBN, Godwin Emefiele, had, in October 2022, announced plans to redesign the old N200, N500, and N1,000 notes.