CBN may increase weekly dollar allocation to BDCs to $15,000

…urged to intervene more to rid forex market off speculation

… As naira weakens to N465 against dollar

The Central Bank of Nigeria (CBN) may next week increase the weekly dollar sales to BDCs from $8,000 to $15,000 each, currency dealers said on Wednesday.

Scarcity of dollar is being noticed at some Bureau De Change segment of the forex market, while those who still have sold at N460 per dollar. 

Aminu Gwadabe, acting president, Association of Bureau De Change Operators (ABCON) told BusinessDay that the association is working with the CBN for a review of volumes for BDCs next week.

However, the Apex bank has been urged by some analysts to continue its intervention efforts to further rid-off speculation in the foreign exchange market.

This is against the backdrop of gradual weakening of the nation’s currency in the black market. The naira on Wednesday depreciated to N465 per dollar losing N5.00k from the N460/$ traded the previous day at the parallel market.

BusinessDay market checks show that dollar was sold at the rate of N362 at Apapa, while it closed at N465 per dollar at Festac area of Lagos State.

Kunle Ezun of treasury research, Ecobank Nigeria, attributed the naira depreciation to forces of demand and supply adding that speculation is also contributing to this.

“The CBN should supply more to shore up the naira value”, Ezun told BusinessDay in a phone interview.   

At the inter-bank foreign exchange, the foreign currency closed at N305.70k, which was show a slight gain of N0.05k compared to N305.75/$ the previous day according to data from FMDQ.

The foreign reserves rose to $29.96 billion as at March 7, 2017 according to data from the CBN and this has continued to support the naira performance. The CBN sold another US$100 million via SMIS– Wholesale to the Banks for Forwards transaction not exceeding 60-Day, thereby bringing its intervention in the market to US$1.12 billion in two weeks.

Market analysts observe that the CBN intervention effort will further create problems for currency speculators who are yet to recover from the sudden appreciation of the Naira. According to the former economic adviser to the President and Minister, National Planning Commission, Ode Ojowu, “It appears this time around, the CBN has decided to become smarter than the market manipulators, by putting on its cap of authority to look beneath the market forces”.

The CBN in February 20, 2017, changed its forex rule supply to guarantee supply to both small and the big end-users. The policy has restored stability and bolstered market confidence which has ultimately boosted the value of the Naira.