Naira declines after CBN halts forex sales to BDCs

On Tuesday, the naira sank slightly versus the dollar on the parallel market after the Central Bank of Nigeria (CBN) declared that it would no longer sell forex to Bureau De Change operators.

The parallel market, according to the bank, has become a conduit for illicit FX flows and graft.

The CBN has also announced that it will halt the processing of BDC license applications in the country.

The CBN governor, Godwin Emefiele, said this during a live TV broadcast while announcing that the bank’s benchmark policy rate has been maintained. He also said that the CBN’s weekly foreign exchange sales will now go directly to commercial banks.

Mr Emefiele expressed worry that BDCs have allowed themselves to be utilized for graft.

According to data compiled by abokiFX.com, a website that collates parallel market rates in Lagos, the naira finished at N505.00 per $1 on Tuesday, down N1.00 or 0.20 percent from the previous session’s rate of N504.00.

On Tuesday, the local currency declined against the dollar in the official market sector, according to data from the FMDQ Security Exchange, where FX is officially transacted.

According to published data, the naira finished at N411.67 per $1 on Tuesday, down N0.17 or 0.04 percent from N411.50, the rate at which it traded with the hard currency the previous day on Monday.

This was reflected in FX turnover, which fell 17.10 percent to $115.67 million at the end of the market session, down from $139.49 million the previous session on Monday.

On Tuesday, the currency fell to an intraday low of N412.95 before rising to a high of N387.67 and finishing at N411.67.

As of Tuesday’s closing of business, the disparity between the official market and parallel market sector rates was N93.33, corresponding to an 18.50 percent margin.