• Sunday, May 26, 2024
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BusinessDay

Naira now exchanges at 1,245 as BDCs await CBN to adjust rate

Naira loses 1.47% on black market after rate hike

The naira on Friday appreciated to 1,245 per dollar on the parallel market, stronger than the rate at the official and Bureau De Change (BDC) segment of the foreign exchange (FX) market.

At the official FX market, the dollar was quoted at N1,25507 on Thursday, while it quoted around N1,269/$1 at the BDC segment.

The Association of the Bureau De Change Operators of Nigeria (ABCON) is in talks with the Central Bank of Nigeria (CBN) over FX rate adjustment.

A recent circular from the CBN said the apex bank sold dollars at N1,251 to the BDC operators and directed them to sell to eligible customers at a rate not exceeding 1.5 percent above the purchase price.

Some online news media reported that the CBN has adjusted the FX rates for BDCs to N1,190 per dollar. “Is not true. The CBN is yet to make any new adjustments on their applicable exchange rate,” Aminu Gwadabe, national president of ABCON, told BusinessDay on Friday.

With the current rate at the parallel market, also called black market, the naira has gained 1.20 percent compared to N1,260 per dollar exchanged on Thursday at the black market. When compared to the level on February 20, 2024, the local currency has gained 46.58 percent of its value against the dollar on the same market.

The Naira, Nigeria’s currency, continued its appreciation against the US dollar on the official foreign exchange reaching the highest of N1,255.07/$1 since three months.

The last time the Naira was stronger than the current exchange rate was on January 26, 2024 when it closed at N891.90 per dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to the data compiled from the FMDQ Securities Exchange.

With the current exchange rate, Naira has gained 29.67 percent when compared to the lowest of N1,627. 40 per dollar on March 8, 2024, at NAFEM.

The CBN circular to the BDCs reads, “We refer to our letter to you referenced TED/DIR/CON/GOM/001/071 in respect of the above subject wherein the CBN approved a second tranche of sale of FX to eligible BDCs.

“We write to inform you of the sale of $10,000 to each BDC at the rate of N1,251/$1. The BDCs are to sell to eligible end users at a spread of not more than 1.5 per cent above the purchase price.”

In February 2024, the CBN formalised dollar sale of $20,000 per BDCs. This followed the on-going reforms in the foreign exchange market, aimed at achieving an appropriate market determined exchange rate for the Naira.

In a circular issued by the CBN on February 27, 2024, signed by Hassan Mahmud, director of the trade and exchange department, the bank expressed concern over ongoing price distortions in the retail market, contributing to widening exchange rate discrepancies in the parallel market.

In response, the CBN announced the approval of foreign exchange sales to eligible Bureau De Change to address the demand for invisible transactions. Each BDC is permitted to purchase $20,000 at a rate of N1,301/$ – representing the lower band rate of spot transactions executed at NAFEM on the preceding trading day (as of February 27, 2024).

All eligible BDCs were instructed to make Naira payments to designated CBN foreign currency deposit Naira accounts and provide payment confirmation along with necessary documentation for disbursement at specified CBN branches in Abuja, Awka, Lagos, and Kano.