At N463/$, Improved FX Liquidity Strengthens Naira on Parallel Market – ThisDay

Nigerian naira notes are seen in this picture illustration March 15, 2016 REUTERS/Afolabi Sotunde/Illustration

Obinna Chima

The naira continued on the path of appreciation on the parallel foreign exchange (FX) market yesterday as it closed at N463 to the dollar, higher than the N467 to the dollar it closed the previous day.

This development was once more attributed to the appointment of Travelex and FirstBank Nigeria Limited as the only two institutions responsible for the sale of the greenback to the Bureau De Change (BDC) sub-sector of the economy.

THISDAY yesterday reported that following their failure to fully comply with the directive which requires commercial banks that act as agents of international money transfer operators to always sell foreign currency remittances to licensed BDC operators, the Central Bank of Nigeria (CBN) this week relieved 19 other banks of the role.

However, all the affected banks are expected to sell their dollar inflows from remittances to Travelex, for onward sale to the BDC. The CBN took the decision because the returns on forex sales had shown that the affected banks had not been active in selling the greenback to BDC operators since the directive was given in July.

The President of the Association oof Bureau De Change of Nigeria (ABCON), Alhaji Aminu Gwadabe, welcomed the move by the central bank, saying it would help strengthen the naira and improve dollar liquidity in the market.
“It will ensure that more dollar are distributed to BDCs in uniform and transparent manner as some of the banks have not been selling funds from the international money transfer operators (IMTOs).

“If you check, since Travelex started selling to BDCs, speculation has reduced in the market and the naira is on the path of recovery. My advise to our members is to partner with the central bank on this project. I advice everybody to be patriotic, any member that goes against the rule would be punished,” Gwadabe had said.

Travelex, a global foreign exchange company, last week began weekly disbursements of US$15,000 (part of the country’s diaspora remittances) to each of the 3,000 registered Bureaux DeBDC) operators in the country.

Travelex was officially directed by the CBN to distribute FX to BDC operators following complaints from BDCs of low supply from the banks.
Nevertheless, on the interbank FX market, the spot rate of the naira remained unchanged at N304.50 to the dollar yesterday.