$30m sales to BDCs boost liquidity in forex market
A bureau de change operator counts U.S. currency notes
A total of $30 million from the proceeds from the International Money Transfer Operators (IMTOs) as coordinated by the Central Bank of Nigeria (CBN) was injected into the Bureau De Change (BDC) segment of the foreign exchange market, which has helped to strengthen the naira.
Consequently, the value of the naira which has traded at between N365 and N363 per dollar for the past weeks, appreciated to N361.50k on Friday at the BDC segment and parallel market.
The local currency gained marginally by N0.05k to close at N306.00k per dollar on Friday from N306.05k/$ traded on Thursday, at the inter-bank market, data from FMDQ show.
At the investors and exporters forex window, the naira firmed to N360.33k on Friday, gaining N0.27k over N360.60k traded the previous day.
“We retain our favourable outlook for the exchange rate amid sustained stability in global crude oil prices which should result in further build-up in foreign reserves as well as the CBN’s continued intervention to meet demand at the interbank foreign exchange market”, analysts at Cowry Asset Management said.
Aminu Gwadabe, president, Association of Bureau De Change Operators of Nigeria (ABCON) disclosed that 15,000 BDCs got $20,000 each from the IMTOs on Thursday and Friday and are expected to get more supply on Tuesday (January 2, 2018) this week.
Gwadabe said the dollar received so far, is sufficient for the market before the resumption of intervention by the CBN.
“We are partnering with the CBN to ensure exchange stability continues, even though we are operating at a loss”, Gwadabe told BusinessDay on phone.
Gwadabe wants the CBN to merge the rates at which banks and BDCs buy the dollar from the CBN, saying it is pushing BDC operators out of the market, as the bank rates is lower. He said banks buy at the rate of N358/$ while BDCs purchase at N360/$.
The CBN on December 12, 2017, intervened in the interbank window of Nigeria’s Foreign Exchange market with the sum of $210 million to enhance liquidity.
The Bank offered the sum of $100million to the wholesale segment, while the SMEs and invisibles segments each received the sum of $55 million.
Isaac Okorafor, acting director, corporate communications at the CBN, said the interventions were meant to boost liquidity, trade and ease of remittances for legitimate personal commitments.
He said the interventions had largely checked unwholesome activities of currency speculators, adding that the CBN would not relent in its daily monitoring of activities in the market in order to ensure that all concerned operate in line with extant rules.
Big Read |