• Friday, July 19, 2024
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BusinessDay

CBN stuck defending naira as insider forex deals flourish

dollars

Nigeria’s apex bank, the Central Bank of Nigeria (CBN), is scatching its head over the continued depreciation of the naira against the dollar, as insider forex deals are  said to be flourishing.

The bank, a source told Businessday, continues to work on strategies to tame wide speculation on the naira against the dollar, as its continuing defense of the currency depletes foreign reserves amidst unfavourable developments around crude oil price at the international market.

Nigeria’s foreign reserves fell to $31.4 billion as at February 26, from $34.44 billion a month earlier. The CBN has been drawing down on reserves to support the ailing local currency, hit by falling global oil price and the escalating tensions ahead of forthcoming presidential elections this month. Brent crude hit a low of $60.86 a barrel and was at $62 by 1400 GMT Monday, down $1.58.

“Why is demand rising at the BDCs segment of the market?”,  an informed financial market sources asked.

The demand for dollars had continued to rise at the parallel market controlled by Bureaux -de-Change operators, with evidence of decline in the value of naira against the dollar when compared with the rate at the interbank.

   Barely two weeks ago, the CBN took a bold step and stopped the Retail Dutch Auction System (RDAS) where speculation was said to have flourished, and directed all forex buyers to the interbank market.

At the BDC market, yesterday, one dollar exchanged for N225; while the British pound sterling exchanged for N339; and Euro N249. But at the interbank market, one dollar exchanged for N200.39.

Iheanyi Nwachukwu &  Hope-Moses Ashike