BDCs to sell dollars to end users at N392

In a move to unify the exchange rates as recommended by the International Monetary Fund (IMF), Nigeria’s Central Bank at the weekend adjusted the rates by N6 across foreign exchange market segments.

Effective November 30, 2020, the CBN will be selling dollars to Bureau De Change (BDC) operators at N390 and the BDCs are expected to sell at N392 to the end users. This represents N6 adjustment compared to N384 and N386 respectively, in August, 27, 2020.

In a circular signed by Nnaji O.S, director, trade & exchange Ddepartment, International Money Transfer Service Operators (IMTOs) are to sell to banks at N388, which is N6 higher than N382 in August 2020.

Banks are to sell dollars to the CBN at N389, which is also N6 higher than N383 directed in August 2020 by the regulator.

However, the CBN retained the $10,000 sales to each BDCs since August 2020.
Naira has continued to depreciate across FX market segments weakening by NGN11.00/USD to trade at NGN495.00/USD on Friday on the black market, from its close of NGN484.00/USD in the previous week.

Consequently, the currency depreciated by NGN33.00/USD or 6.7% since the start of November. The Investors and Exporters (I&E) window was also pressured, closing N4.42/USD weaker to trade at N390.25/USD on Friday against N385.83/USD last week.

“Notably, the I&E Window hit a high of N393.25/USD during the week,” analysts at Greenwich Merchant Bank said.

The CBN has sold over $1.0 billion to BDCs since September 2020, in a bid to inject more liquidity and ease demand pressures. However, the volatility in the market remained persistent, said analysts at FSDH research.

Aminu Gwadabe, president, Association of Bureaux De Change Operators of Nigeria (ABCON) said forex speculators are taking huge risks with their funds, as the Central Bank of Nigeria (CBN) has enough financial muscle to defend the naira and close the widening gaps between official and parallel market rates.

Godwin Emefiele, governor of the CBN said after the Monetary Policy Committee (MPC) meeting on Tuesday that the black market is a shallow market of only about five per cent of the foreign exchange market which is patronised by people who go there for cash to offer bribes and corruption. Parallel market is the place where people who don’t want to provide documents go, he said.

“At the Investors and Exporters (I&E) window, the rate is about N386 or N387 / $1. We don’t control the I&E window. Why will anyone use the parallel market to say that the exchange rate is over N480/$1,” Emefiele said.