Naira Weakens Amidst $312bn CBN Intervention

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By Nse Anthony-Uko

ABUJA,  (Sundiata Post)  – The Naira suffered fresh onslaught of speculative demand at the parallel market on Friday despite the $312 million released by the Cenal Bank of Nigeria (CBN) through dollar sales at the interbank and bureau de change ends of the foreign exchange market.

The rally of the naira seemed to have halted at the parallel market as the local currency closed last week weaker NN390 per dollar sold at the beginning of last week, its value depreciated to N405 per dollar.

The  CBN commenced it’s weekly dollar sales to BDCs last week selling $31 million at $10,000 each to the 3,147 licenced operators.
To further ensure that there is enough foreign currency to meet demands for invisibles such as personal and basic travel allowance, medicals and school fees, it also held a special sale during the week selling another $10,000 each to the BDC operators.
This is aside the $250 million it sold at the interbank end of the market for wholesale spot and forward demands as well as invisibles. Despite these, the difference between the value of the naira at the interbank and parallel market continued to widen as the currency weaker on the streets.
Head of Research at Afrinvest West Africa, Robert Olatunde, said the declining value of the naira at the parallel market could be linked to the exclusion of the 41 items from the eligible for foreign exchange at the interbank market.
He noted that analysts at the investment firm “continue to see foreign exchange rate trending within the band of N390– N400 per dollar in the parallel market pending a review of the 41 items exempted from accessing forex at the official market.”
However, the president of the Association of Bureau de Change Operators of Nigeria (ABCON) Aminu Gwadabe differed saying the renewed activities of speculators at the parallel market had led to the weakening of the currency on the streets.
According to Gwadabe, the poceeds of illegal foreing currency evacuation to the Dubai market marred the naira’s journey to stability and sovereignty.

“In its bid to ensure that naira is stable and free from spikes the CBN on friday ensure that over $31million dollars intervention was disbursed to 3135 BDCs nation wide by the CBN [lightbox full=”http://”][/lightbox]through the IMTSO window and an inflow of $100 million in the interbank market.
“The disbursements were as a result of the CBN policy to provide a level playing ground for different operators in the market, remove disparity in applicable exchange rate, enhancing liquidity across all board and overall rate convergence.
“Ironically this development did not help the naira from recovering as being witnessed previously in the market as naira reached a high of N405 per dollar. The reasons are speculators, renewed on slaught on the naira.return of illegal foreing currency cash evacuation through our boarders/airports, as Dubai in UAE enjoy the illegal evacuation,operators/players compromise , sales of debit cards by banks rather than cash, and the maximum of $10,000 cash allowable for travelers at the nation’s airport.”
In addressing this, Gwadabe called for a review and increase in security surveillance at the borders and airports. He also urged the CBN to create special purpose window for foreign investors at the BDC end of the market such as it is with International Money Transfer Operators ( IMTSO) to diversify strems of foreign reserve.
Meanwhile, BDC operators will today converge in Lagos to discuss price stability and compliance with regulations guiding their operarions following the liquidity flow the CBN has changed towards the sector. CBN spokesman, Issac Okoroafor had told Leadership that any BDC found wanting would have its licence revoked by the apex bank.

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