Naira to stabilise this week as CBN raises dollar sales to BDCs by 100%

Naira is expected to stabilise this week specifically at the alternative market following the Central Bank of Nigeria’s (CBN) upward review of the weekly forex cash sales to bureau de change (BDC) operators by 100 percent.

The CBN on Friday increased the weekly forex cash sales from $15,000 to $30.000 per BDC with effect from January 28, 2015 foreign exchange auction. Olakanmi Gbadamosi, director, trade and exchange department, in a circular said while the CBN will sell to BDCs weekly at the prevailing inter-bank rate, the BDCs are expected to sell to the public at not more than 3.5 percent above the CBN selling rate.

Consequently, all BDCs are to ensure that the designated account in the CBN are duly funded with the equivalent naira proceeds not later than 48 hours before the billing date. Analysts are optimistic that this development will bring some level of stabil¬ity to the nation’s currency that has been under pres¬sure as a result of the falling oil prices.

“We expect relative stability of the naira at the alternative foreign exchange market segments as the CBN policy takes effect particularly with the 100% increase in dollar sales to BDCs”, analysts at Cowry Assets Management Limited have said.

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Naira declined relative to the dollar across all alternative market segments last week, in spite of CBN foreign exchange auction at the Retail Dutch Auction (RDAS).
The CBN offered USD400 million but sold USD373.59 million, a 25.17% decline from the oversubscribed USD499.26 million sold the previous week.

Consequently, the USD/naira exchange rate held steady at N168.00/USD. At the inter-bank market, the naira lost 2.19% to close at N190.18/USD by Friday. Similarly, the naira weakened by 6.81% at the bureau de change segment to N204.00/USD while it depreciated by 7.53% to N207.00/USD at the parallel market segment.

On Wednesday, the apex bank increased the foreign exchange trading position limit of author¬ised dealers to 0.5% of shareholders fund (SHF) unimpaired by losses (from 0.1%). Furthermore, CBN instructed authorised dealers that both “RDAS and interbank funds shall strictly be used for fund¬ing letters of credit, bills for collection and other invis¬ible transactions subject to appropriate documenta¬tion as provided by extant regulations.”