Nigeria’s currency strengthened by N1.66k against the dollar on the black market on Tuesday, a day after the Central Bank sold $51.8 million to 5,180 Bureau De Change (BDC) operators in the country on Monday.
The dollar was trading at an average rate of N440 (selling) and N433.33k (buying) as at 1.42pm on Tuesday, as against N441.66k (selling) and N436.33k (buying) traded after the close of business on Monday on the black market.
With current rate, naira gained N4.33k when compared with N444.33k traded during intraday trading on Monday. However, against the rate the dollar was sold on Tuesday last week, naira was stable at N440 on the black market.
As at 1.41pm on Monday, the dollar had depreciated by an average rate of N4.33k, trading at an average of N444.33k compared to N440 traded on Friday. This was despite the sales of $51.8 million to BDCs by the CBN.
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Traders had, however, projected that the rate would moderate eventually.
The CBN dollar sales to the BDCs seems to be making impact as the dollar was going for N435 (selling/traders) and N430 (buying/traders) at Festac, N445 (selling) and N435 (buying) at Apapa, and N440 (selling) and N435 (buying) at Eko Hotel area of Lagos State as at 1:42pm on Tuesday.
At the BDC segment of the foreign exchange market, naira gained N1.00k as the dollar was sold at N441 on Tuesday from N442 the previous day.
The CBN had asked the BDCs to sell dollar at N386 to the end users. 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.
Analysts and industry watchers, however, 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 will 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 is speculative.
The foreign exchange market opened on Tuesday with an indicative rate of N386.48k at the Investors and Exporters (I&E) forex window. This signalled depreciation in the value of naira by N029k compared with N386.19k opened with on Monday, data from FMDQ showed.
Daily FX turnover declined by 49.28 percent to $45.22 million on Monday from $89.15 million recorded on Friday at the I&E window.
At the Investors and Exporters (I&E) FX market, naira appreciated by 0.03 percent as the dollar was quoted at N386.00 as compared to N386.13 on the previous day.
Analysts at FSDH said most participants maintained bids between N380.00 and N395.13 per dollar.
“We expect the market rates to oscillate in tandem with the supply dates from the CBN i.e. lower on Mondays and Wednesdays, while higher on the days,” analysts at Zedcrest Capital Limited said.
