Banks, customers spot forex weekly transactions rise to $508.70m

… naira to appreciate as CBN again intervenes with $350m
… directs banks to open teller points in all locations
Hope Moses-Ashike
Trading activity in the Spot FX market between the banks and their clients rose to $508.70 million with average daily turnover of $101.74 million for the week ending February 24, 2017, according to data from FMDQ.
This represents a 269 percent increase from the $137.73m with average daily turnover of $27.55m recorded in the previous week.
Activity in the Spot FX market amongst banks for the same trading week revealed an 81 percent increase, as a total turnover of $104.07mm with an average daily turnover of $20.82m was recorded against the $57.57m with average daily turnover of $11.51m reported the previous week.
In the week-ended February March 3, 2017, the exchange rate in the Bureau de Change (BDC) market fell by N11.00 per dollar to close at N485.00, indicating a 2 percent decrease when compared to $/N496.00 reported at the end of the previous week-ending February 24, 2017.
In the inter-bank market, the official exchange rate fell by $/N0.25 to close at N305.25 per dollar, indicating a 0.1 percent decrease when compared to N305.50/$ reported at the end of the previous week-ending Feb. 24, 2017.
In the inter-bank market, the official exchange rate fell by $/N0.25 to close at $/N305.25, indicating a 0.1 percent decrease when compared to $/N305.50 reported at the end of the previous week-ending Feb. 24, 2017.
The spread between the inter-bank and BDC exchange rates fell by $/N10.75 to N179.75 per dollar, representing a 6 percent decrease from the spread of $/N190.50 recorded the previous week-ending February 24, 2017.
However, in the OTC FX Futures market, contracts worth $40.81m traded in about 11 deals for the week-ended March 3, 2017, compared to the previous week’s total of $265.24m traded in about 19 deals.
The nations currency, which depreciated to N465 to the US dollar on Friday is expected to firm this week as the Central Bank of Nigeria (CBN) on Friday said it plans to inject additional $350 million in the interbank forex market, through its special wholesale intervention forward sales.
Consequently, the CBN on Sunday directed deposit money banks to open teller points for retail forex transactions, including buying and selling, in all locations in order to ensure access to forex by their customers and other users, without hinderance.
In a circular signed on Sunday by Alvan Ikoku, director, financial markets department, all banks must have an electronic display board in all their branches, showing rates of all trading currencies and customers must insist on processing forex transactions based on the displayed rates.
According to the circular, banks are mandated to process and meet the demand for travel allowances (PTA/BTA) by end-users within 24 hours of such application, as long as long as the end users meet basic requirements.
Also banks are mandated to process and meet demand for school fees and medical bills within 48 hours of such application.
Sources in the interbank window confirmed that the move by the CBN was to ensure foreign exchange liquidity and guarantee access to the United States dollar.
According to the source that declined anonymity, there was currently a liquidity glut in the market, as banks were now sending their marketing officers to scout for customers that genuinely require foreign exchange for the purposes identified for intervention.
The source further indicated that the banks were eager to dispose off the forex sold to them by the CBN in order not to suffer losses that may arise from further appreciation of the naira.
“There is also palpable fear in the market that the continued offloading of dollar cash by those who have been hoarding the currency would further lead to naira appreciation,” the source added.
Confirming the intervention by the CBN, Isaac Okorafor, spokesman and acting Director, Corporate Communications Department,  said the CBN was committed to easing the pressure on Nigerians who genuinely required forex to meet personal commitments.
Okorafor disclosed that reports monitored on a daily basis at the Bank indicated that the bold move by the Apex Bank was having the desired impact in the interbank foreign exchange market. He expressed optimism that the trend would be sustained for the benefit of all Nigerians.
It would be recalled that the CBN, in the past two weeks, has injected over $500 million into the foreign exchange market through a special wholesale intervention forward sales intervention in order to create liquidity in the sector.