People & Money

Despite Resumption of Forex Sales to Bureau de Change Operators, Naira Plunges

The Central Bank of Nigeria’s measures to address Nigeria’s naira continued plunge appears ineffective as the currency weakens further against the United States’ dollar this week.

Despite the resumption of forex sales to Bureau de Change operators by the Central Bank of Nigeria earlier in the week, the naira has continued to plunge in the parallel market.

On Friday, data obtained from market participants showed that the naira exchanged to the United States’ dollar at N440/$1 in Lagos on Thursday, down from N433 a day prior.

Last week, the CBN announced resumption of sales of forex to BDCs. According to O.S. Nnaji, director of trade and exchange department, the new decision is part of efforts to enhance accessibility to foreign exchange to travelers.

“As part of efforts to enhance accessibility to foreign exchange particularly to travelers following the announcement of the limited resumption of international flights by the Honourable Minister of Aviation commencing with Abuja and Lagos, the Central Bank of Nigeria hereby wishes to inform the General Public that gradual sales of foreign exchange to licensed BDC operators will commence with effect from September 07, 2020,” the CBN said.

Read: Nigerian Manufacturers Groan As Unsold Inventory Rises Amid Forex Shortage

“Consequently, purchase of foreign exchange by BDCs shall be on Mondays, and Wednesdays in the first instance,” it added.

BDCs are to ensure that their accounts with the banks are duly funded with the equivalent Naira proceeds on Fridays and Tuesdays accordingly, the bank said.

“Meanwhile, Authorised Dealers (deposit money banks) shall continue to sell foreign currencies for travel related invisible transactions to customers and noncustomers over the counter upon presentation of relevant travel documents (passport, Air ticket & Visa),” Mr Nnaji said.

“All Authorised Dealers and Bureau De Change Operators are hereby advised to ensure strict compliance with the provisions of the extant regulations on the disbursement of foreign exchange cash to travellers, as any case of infraction will be appropriately sanctioned.”

Last weekend, the CBN’s position impacted the value of the naira, as it appreciated from N480 against the United States’ dollar to about N420.

On Monday, when forex sales to BDCs resumed, about 5,000 BDCs reportedly received $10,000 each.

But beginning Thursday and up until Friday morning, Naira has plunged further to N440$1 in Lagos parallel market.

Earlier on Wednesday, it was valued at N433 against the greenback in the parallel market.

 

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