The Naira, Monday, appreciated to N296 per dollar in the parallel market due to expectation that the Central Bank of Nigeria (CBN) will sell autonomous dollar to bureaux de change this week. Vanguard’s survey of major cities reveals that in Lagos the Naira appreciated by N4 as the parallel market exchange rate dropped from N300 per dollar on Friday to N296 at the close of business yesterday. In Abuja, the Naira appreciated by N5 as the parallel market rate fell to N295 from N300, while in Kano, the Naira gained N2 as the parallel market exchange rate dropped to N298 from N300.
Bureaux de change sources, who confirmed this development to Vanguard, explained that the appreciation was driven by expectation of inflow from the CBN. President, Association of Bureaux de Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, confirmed to Vanguard that while the expectation that CBN will start selling autonomous dollars to BDCs made the parallel market rate to fall to as low as N285 per dollar in the afternoon, the rate, however, rose to N295 towards the end of the day when expectation did not materialise. Chief Executive Officer, H. J. Trust BDC also confirmed this development, saying: “There was rumour that the CBN will start selling to us, so nobody was willing to buy dollars, and this forced the rate to crash. But the rate went up again towards the end of the day.”
Last Friday, the CBN had pledged to explore the option of selling autonomous dollars sourced from oil firms to BDCs so as to address the sharp and stead depreciation of the Naira in the parallel market. This was an outcome of a meeting held, yesterday, between the management of the CBN led by the Governor, Mr. Godwin Emefiele and the Executive Council of Association of Bureaux de Change Operators of Nigeria.
On Monday, the CBN stopped the direct sale of dollars to BDCs, a situation which triggered N35 depreciation of the Naira in the parallel market as the exchange rate in the market moved from N280 per dollar on Monday to N305 on Wednesday. Miffed by this situation, the CBN Governor invited ABCON Executive Council to a meeting in Lagos to discuss ways to arrest the Naira depreciation in the market. Confirming this development to Vanguard, ABCON President, Gwadabe, said the association made it clear to the CBN that the Naira depreciation was due to scarcity of dollars, which was aggravated by the decision to stop selling dollars to BDCs.
Said he: “We made it clear that the situation will persist except there is some form of intervention in the market. We also discussed how BDCs could source dollars from autonomous sources. In the end, the CBN Governor said that while the apex bank cannot resume sale of dollars from the nation’s external reserve to BDCs, it will consider selling dollars sourced from autonomous sources to them. The governor said the apex bank would source autonomous dollars from oil firms for direct sale to BDCs so as to ease the demand pressure in the parallel market. The modalities, however, will be worked out and announced next week. We hope that this would help to calm the market and stabilise the exchange rate of the Naira in the parallel market.”