Naira Gains at Parallel Market on Restriction Removal

23 Aug 2011

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Naira, Dollar Notes

The Naira appreciated significantly against the dollar at various parallel market points visited in Lagos Monday as a result of the removal of the limit placed on supply of the greenback to Bureaux De Change (BDC) operators from autonomous sources last weekend.

But the Nigerian currency slipped at both the bi-weekly regulated market and the interbank market.
THISDAY findings showed that the local currency gainedN4 on the average Monday as ‘black market’ operators where able to get enough supply to meet end-users’ demand.
For instance, at some parallel market points at Ikeja, Lagos State, THISDAY findings showed that the Naira which traded at N164.50 to a dollar last week, sold between N162.50/$1 and N161/$1 Monday.  In the same vein, local currency improved remarkably at various parallel market points at Marina, Lagos from about N166 to a dollar last week to between N161/$1 and N162/$1.

The Central Bank of Nigeria (CBN) had through a circular at the weekend, approved the lifting of the ceiling of $1 million as maximum amount that can be sold to BDC operators from autonomous funds weekly.
The latest circular with reference number: “TED/FEM/GEN/FPC/01/016,” had explained: “Following the review of developments in the forex market and the need to stabilise the exchange rate, authorised dealers are hereby is informed that management has approved the removal of the limit of $1 million as maximum amount that can be sold to BDC operators from autonomous funds, weekly. Consequently, authorised dealers are allowed to increase sell of forex from autonomous funds to BDCs subject to compliance with the provisions of anti-money laundering laws and observance of appropriate principles.”

Currency dealers that spoke with THISDAY argued that with the new policy, the cost of importation may drop as there may no longer be scarcity in the system. The dealers also opined that the policy may help the banking sector regulator in achieving its objective of closing the gap between the official and parallel market,” a dealer said.

However, at the CBN’s regulated Wholesale Dutch Auction System (WDAS), the local currency slumped BY 49 kobo as it closed at N151.84/$1 yesterday, as against last Wednesday’s closing value of N151.35/$1. Just like the previous auctions, demand also outstripped supply Monday as the total value of unmet demand stood at $162 million. In all, the CBN offered a total of $400 million whereas the total demand by the 20 banks that participated in the auction stood at $562 million.
The Naira also tumbled significantly at the interbank market by N2.25 to N155.95/$1 yesterday, from N153.70/$1 last Friday.

Tags: Business, Nigeria, Featured, Nigerian currency

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