Nigeria’s central bank resumed dollar sales to Bureau De Change (BDC) operators on Monday, selling $51.8 million to 5,180 BDCs across the country.
But this dollar allocation could not strengthen the value of naira, which as at 1.41pm on Monday had depreciated by an average rate of N4.33k as the dollar traded at an average of N444.33k compared to N440 traded on Friday on the black market.
Aminu Gwadabe, national president, Association of Bureau De Change Operators of Nigeria (ABCON), told BusinessDay that 5,180 BDCs had been cleared to collect $10,000 each from the International Money Transfer Operators’ (IMTOs) proceeds nationwide.
He said payment had started in all the collection centres across the zones, which consist of Lagos 2,770 BDCs, Abuja 800 BDCs, Kano 900 BDCs, and Awka 450 BDCs.
Currency traders, however, told BusinessDay that the $10,000 allocation to each BDC by the CBN was not enough to meet the huge demand for the greenback by end users.
A breakdown of the exchange rate across three areas of Lagos where black market operators operate, as surveyed by BusinessDay, shows that dollar is going for N450 (selling) and N438 (buying) at Eko Hotel, N438 (selling) and N434 (buying) at Lagos international airport, and N445 (selling) and N440 (buying) at Festac Town, Lagos.
However, according to traders’ speculations, the rate moderated marginally as the FX market closed at an average rate of N441.67 per dollar, representing N2.67k gain over N444.33k traded intraday.
With the closing rate, naira has lost N11.66k when compared with N430 it closed with on Friday last week on the black market.
Reacting to the development, Johnson Chukwu, managing director/CEO, Cowry Asset Management Limited, is careful not use one single day development to make judgment, but said, “The market needs to be observed as from Tuesday (today) to see what happens. If the CBN sustains dollar sales, naira would stabilise.”
But the greenback closed Monday for N445/intraday N450 (selling) and N438 (buying) at Eko Hotel, it weakened to N440 from N438 (selling) and N436 from N434 (buying) at Lagos international airport, and closed N440 from N445 (selling) and N435 from N440 (buying) at Festac Town, Lagos.
Analysts and industry watchers doubt the sustainability of the fixed rate for BDCs by the CBN.
Taiwo Oyedele, head of tax at PwC, said the ability to sustain the rate of N386 prescribed by the CBN for dollar sale by BDCs would depend on whether the CBN itself can sustain the allocation of dollars to the BDCs to meet the demand in that segment of the market, some of which was speculative.
At the Investors and Exporters (I&E) FX market, the naira appreciated by 0.03 percent as the dollar was quoted at N386 as compared to N386.13 the previous day. Analysts at FSDH said most participants maintained bids between N380 and N395.13 per dollar.
Moreover, Nigeria’s FX reserves grew slightly last week, despite the CBN’s interventions across the various FX windows. FX reserves increased by $38.50 million to $35.70 billion as of September 4, 2020.
The CBN had in a circular last week signed by Ozoemena Nnaji, director, trade and exchange department, announced the applicable exchange rate for the disbursement of International Monetary Transfer Operators (IMTOs) proceeds as follows: IMTOs to sell to banks at N382 per dollar, banks to CBN at N383 per dollar, CBN to BDCs at N384 per dollar, and BDCs to end-users at not more than N386 per dollar.
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