Foreign exchange rate between the Bureau De Change (BDC) and the black market was said to have converged on Tuesday, as dollar crashed to N360 and N363, respectively, at both market segments after the CBN further liberalised the interbank market.
The Central Bank of Nigeria (CBN) on Monday liberalised the interbank market by introducing a new spread limit of N1 on interbank transactions, stating this in a circular issued on Monday, which is aimed at further developing the foreign exchange market and improving its structure.
The new circular, among other provisions, allows authorised dealers to sell their excess foreign currency trading positions to other authorised dealers without seeking prior approval from the CBN.
According to the circular, the fund purchased by an authorised dealer from another authorised dealer in the interbank market shall not be held in position overnight by the buying authorised dealer or sold to another authorised.
In a circular signed by Alvan Ikoku, director, financial markets department, the CBN said “authorised dealers shall not exceed their respective foreign currency trading position limit (FCTPL) without the approval of the CBN,” adding that it shall strictly monitor compliance with the FCTPL.
The CBN again advised authorised dealers to encourage their clients to on-board the FMDQ-advised forex trading system immediately, to avoid sanctions, foster the speedy migration of the activities of the investors and exporters window unto the forex trading system and, in turn ensure that the objective of deepening the market is achieved.
However, cost of dollar that stood at the rate of N370/$ since last week traded at between N360 and N366 in different parallel market in the country.
It was quoted at N305.55k on Tuesday at the interbank spot market, the same level it traded the previous day.
However, at the investors and exporters window, the local currency weakened to N378.67k yesterday from N377.91k the previous day.
Aminu Gwadabe, president, Association of Bureau De Change Operators of Nigeria (ABCON) said, “We witnessed convergence of rate between the BDC and parallel market today.”
He said some clients were seen trying to buy dollar from the parallel market as there is no much difference both rates.
The Central Bank of Nigeria (CBN) on Monday, June 5, 2017, injected another sum of $190 million into the foreign exchange market, a move aimed at achieving convergence of rates in the interbank and Bureau de Change segments of the foreign exchange market,
At Monday’s trading, the Bank offered the sum of $100,000,000 as wholesale interventions and allocated the sum of $50,000,000 to the Small and Medium Enterprises (SMEs) forex window. Customers requiring forex for Business/Personal Travel Allowances, tuition and medical fees, among others, got $40 million.
Confirming the figures yesterday, the Acting Director, Corporate Communications at the CBN, Isaac Okorafor, said the Bank was pleased at the performance of the naira, which had made tremendous gain against the dollar in recent times.
According to him, the forex rates at both the inter-bank and BDC segments, had almost converged, prompting even greater optimism that the value of the naira will continue to spike.
Okorafor observed that by ensuring transparency in the market as well as fairness to end-users, the CBN had further exposed speculators and checkmated them. He therefore urged all dealers, particularly licensed BDCs, to continue to play by the rule, adding that the CBN would not hesitate to wield the big stick against any erring bank or dealer.
The naira continued to maintain its strong stand against major currencies around the globe, exchanging for $364/$1 in the BDC segment of the market on Monday, June 5, 2017.
Meanwhile, the CBN, also on Monday, issued a circular aimed at further developing the foreign exchange market and improving its structure.
According to Okorafor, the new circular, among other provisions, allows authorized dealers to sell their excess foreign currency trading positions to other authorised dealers without seeking prior approval from the CBN.