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CBN moves to shore up naira, announces emergency intervention for BDCs

CBN resumes dollar sales to banks left out of Tuesday deals

The Central Bank of Nigeria (CBN) may have commenced a fresh move to shore up the naira through special intervention for embattled bureau de change (BDCs) operators who shall enjoy an additional $30,000 allocation bringing to a total of $60,000 cash sale this week.

The CBN announced on Tuesday that it will be selling an additional $30,000 to interested BDCs in a move to shore up liquidity in the foreign exchange market as naira continues to face intense pressure on excessive dollar demand. Analysts see this as another measure by the CBN to bridge the widening gap between RDAS and the parallel market which Godwin Emefiele, apex bank governor, acknowledged last month and promised to find possible strategies to check the rising arbitrage.

The CBN in a circular published on its website said that the intervention is in addition to the weekly dollar sales to the operators which was recently raised from $15,000 to $30,000 per BDC. “Interested BDCs are, therefore, advised to fund their accounts on or before Wednesday, February 4, 2015 to accommodate the proposed intervention of Friday, February 06, 2015,” the CBN noted in the circular.

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Andrew Elueni, chief executive officer of Prime Link BDC, told BusinessDay on phone that the BDC segment is returning to normal after a couple of months of naira depreciation. “For naira to depreciate for two months shows a sign of economic instability”, he added. He said what CBN has done is to increase supply of dollar to BDC operators after it banned them from accessing foreign exchange at the inter-bank market.

Elueni sees the new development as a temporary measure, adding that the impact has not yet been felt in the market until the dollar they bided gets to them. “We have been debited for $30,000 and today we have funded our account with $30,000, we will start receiving dollars today and tomorrow”, he said. “Today, we sell dollar for N207 in Abuja but we think that with this special intervention of the CBN, dollar will drop before elections, especially from next week,” Kabiru Ibrahim, an Abuja BDC operator said yesterday evening.

A major concern of the CBN is the persistent demand pressure in the foreign exchange market, but governor Godwin Emefiele last month ruled out another devaluation of the naira which he said is ‘appropriately priced’ at the moment. Meanwhile, the nation’s currency, the naira, on Tues- day slide by N0.90k/$ or 0.5 percent against the dollar at the inter-bank market.