The Nigerian Naira has weakened on both the official andblack markets as currency yesterday slipped further to 410 against the US Dollar due to apprehension in the market over the supply constraints.
This is coming as the directors of Bureau De Change (BDCs) pledged to corporate with the Central Bank of Nigeria (CBN) to help narrow the exchange rate differentials between the official rate and the black market exchange rate.
The Naira closed last week at about 395 Naira per US Dollar in the black market, after stabilizing at N380/$ the previous week. It even touched N405 to dollar before it returned to N395 after the BDCs began to sell part of the $20,000 from the Central Bank.
The CBN has continued to intervene in the countries foreign exchange market at the apex bank released statement at the weekend showed that it sold $768 million to airlines, agriculture, petrol and raw material/machineries importers, among others at marginal rate of N310/$.
Details of the transactions showed that the retail and Secondary Market Intervention Sales (SMIS) got $418 million while $350 million went to wholesale auction, Business Travel/Personal Travel Allowances, and school fees. The BDCs bought at N360/$ while short-tenured Forwards of 7-30-day maturity will be sold this week to meet demand of manufacturers and all other forex users.
While cautioning its members against round tripping, Gwadabe said: “ we must understand round tripping has implication for Interest rate. once the exchange rate goes up, interest rate will go up and inflation will follow and nobody is gaining.
Since the CBN resumed selling dollars to BDCs, the market has gained more liquidity and naira strengthened to a large extent. The foreign exchange speculators have suffered major losses because of the role of genuine BDCs in helping the CBN to put them under sever check.” The CBN last week sold a total of $20,000 to each BDC.