The pressure on naira/dollar exchange rate may ease this week following the Central Bank of Nigeria’s (CBN) decision to open foreign currency sales window from the proceeds of international money transfers to Bureau De Change (BDC) operators.
The CBN on Friday in a circular signed by Gotring W. D, acting director, trade and exchange department, directed authorised dealers who were agents of approved international money transfers operators to sell foreign currency accruing from inward money remittances to licensed BDCs with immediate effect.
This, according to the CBN, is to ensure stability of the exchange rate and encourage participation of all critical stakeholders in the foreign exchange market.
The foreign currency proceeds of international money transfers sold to BDC operators shall be retailed to end users in compliance with the provisions of anti-money laundering laws and observant of appropriate kYC principles, including the use of BVN.
“Furthermore, authorised dealers and BDC operators are required to render returns on their operations daily and monthly to the director, trade and exchange, CBN via e-FASS application in accordance with extant regulation,” the circular stated.
Meanwhile, the foreign exchange and money market await the decision of the Monetary Policy Committee (MPC) meeting that begins today, as some experts do not see any magic that would bring the desired change in the economy.
However, analysts are optimistic that naira/dollar exchange rate and the rates at which banks borrow from each other, known as interbank, will stabilise this week.
“We anticipate stability at the foreign exchange market, as the apex bank settles its obligations on its 1-month (July 2016) tenor futures contract worth $697 million entered on Monday, 27 June 2016, at the rate of N279/$,” analysts at Cowry Asset Management, said.
Last week, the naira depreciated against the US greenback at all foreign exchange market segments as dollar liquidity remained tight at the interbank market. The local currency depreciated against the greenback, week-on-week by 4.23 percent to N295.37/$ amid strain in dollar supply as the CBN did not intervene in the market.
Paltry transactions worth $780,000, $300,000 and $380,000 were done on Monday, Tuesday and Wednesday, respectively, while $7.10 million worth of trades were done on Thursday. Spot forwards also depreciated w-o-w by 6.22 percent to N310.43/$. The naira equally depreciated at both the BDC and the parallel (or black) market segments by 2.82 percent and 3.31 percent to N365/$ and N375/$, respectively, as unmet dollar demand continued to spilled into the alternative market segments.
