As part of its resolve to sustain the positive momentum in the foreign exchange (FX) market, the Central Bank of Nigeria (CBN) again pumped additional $350 million into the market this weekend.
This will take the total amount supplied to the market by the central bank this week alone to a total to $570 million and may further crash the value of the dollar. The Naira traded between N450 and N460 to a dollar at some parallel market points in Lagos.
The move, which is part of the central bank’s strategy, is expected to further strengthen the value of the Naira.
According to market sources, this has brought panic among traders and other market participants who are yet to recover from the losses some of them have suffered in the last two weeks owing to sharp and sudden appreciation of the Naira.
Commenting on the development, the Acting Director, Corporate Communications, Isaac Okorafor, noted that with the improved reserve levels, the central bank was determined to continuously make forex available to all genuine customers through their banks, advising those hoarding the Dollar to reduce their losses by selling their dollar stock.
Sources also spoke of the likelihood of a liquidity glut as banks were beginning to send out sales people to scout for customers to buy the dollar in an effort to avoid losses arising from the expected further appreciation of the naira.
With this, the CBN would have so far supplied a total of $570 million to the market made up of $80 milllion for Personal Travel Allowance (PTA), medicals and school fees, $100 million in wholesale forwards, an additional another $350 million planned for injec- tion this weekend.
Travelex had on Thursday intervened in the Bureau De Change (BDC) segment of the market by selling $8,000 each to a total of 2,529 approved BDCs. This amounted to $20,472,000 that the currency dealers received.
The President, Association of Bureau De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe confirmed this.
The CBN during the week revealed that it would sell dollars via book-building process, which is a process of capturing demand in the market, to clear a backlog of demand for companies importing machinery, airline equipment and petroleum products.
Under this arrangement, bidding firms were required to pay the Naira equivalent for their dollar bids on the spot market yesterday, while the USD will be delivered in two months’ time, Reuters reported. But the CBN did not say how much it would offer at the sale.
The CBN recently introduced new FX measures which among others things was aimed at easing the burden of travellers and ensuring that transactions are settled at much more competitive exchange rates and had directed all banks to open FX retail outlets at major airports as soon as logistics permit.
Furthermore, the CBN said it decided to significantly reduce the tenor of its forward sales from the current maximum cycle of 180 days, to no more than 60 days from the date of transaction.