CBN, BDCs, Travelex in talk for another trading day – Businessday

By HOPE MOSES-ASHIKE

Bureau De Change (BDC) operators are in discussion with the Central Bank of Nigeria (CBN) and Travelex, a global currency dealer, for another trading day before the New Year.

Most market activities had closed for the two days holiday to mark the Christmas celebration and may still close for the New Year celebration.
The BDCs had the last trading last week where a number of operators got $8,000 allocation from Travelex, instead of $15,000 they used to purchase. The reduction was as a result of persistent dollar shortage.

Aminu Gwadabe, acting president, Association of Bureau De Change Operators of Nigeria (ABCON), said this would further stem the spikes in the foreign exchange market. “I therefore urge our members to be on the alert,” he told BusinessDay in a chart.
Naira further strengthened against the U.S. dollar on Tuesday by N7.00k, closing at a record high of N478/$, about 1.44 percent gain compared to N485/$ traded the previous day at the BDC segment of the market.

The local currency remained stable at the inter-bank spot market, closing at N305.25 per dollar, according to the data from the FMDQ.
Naira had on Monday firmed against the dollar by N10.00 as it closed to a record high of N485/$ at the parallel market.
Gwadabe said was as a result of rushing hour for festive imports and the expectation of increase in dollar liquidity by the Central Bank of Nigeria (CBN) in the coming year.

Last week, Nigerian Naira appreciated against the greenback at the interbank foreign exchange market by 0.04 percent to N315/$.
However, the naira depreciated at both the Bureau De Change and parallel market segments by 1.67 percent and 2.06 percent to N488/$ and N495/$, respectively, amid persistent scarcity of the greenback.

According to analysts at Cowry Asset Management Limited, the announcement by CBN spokesman revealing plans to ensure that the black market is totally eliminated may have led to the further scrambling for dollars during last week and the apparent depreciation of the Nigerian Naira against the US dollars.

Meanwhile, the weekly movements in most dated forward contracts at the interbank OTC segment implied marginal stability of the Naira relative to the US greenback amid an increase in the foreign exchange reserves – external reserves increased week-on-week by 0.84 percent to $25.25 billion as of Thursday, 22 December 2016.

The 1-month, 3-month, 6-month and 12-month forward contracts were stable at N320.18/$, N330.537/$, N346.07/$ and N378/$, respectively. However, the spot rate depreciated week-on-week by 0.08 percent to N305.25/$ despite $7.5 million intervention sales by CBN to banks during the week.

This week, the analysts expect some level of stability of the naira as the markets observe the Christmas and New Year public holidays.