A foreign exchange dealer, Mr Harrison Owoh, on Thursday said the CBN’s upward review of banks’ daily foreign currency trading positions could further weaken the Naira.
Owoh told the News Agency of Nigeria (NAN) in Lagos that the CBN’s decision would give room for speculations about the Naira and further depreciate it.
He said that banks before the review could not speculate because they were only allowed to hold-on to unutilised foreign currencies for 48 hours.
Owoh, who is the Managing Director, HJ Trust Investments Ltd., Lagos, said that the 48 hours allowed banks to buy on the first day, sell the following day and return the unsold forex on the third day to CBN was okay.
He said the one-day extension implied that banks now have an extra trading day, which would give room for hoarding before the unutilised funds were returned to the CBN.
“The commercial banks in the past had only 48 hours to utilise foreign currencies bought, after which they will return it to the CBN.
“Reviewing the time-frame to 72 hours means that banks now have three days to trade with foreign currencies bought and this will lead to speculations.
“The effect is that the extension will give room to speculations and further make the Naira to depreciate because they now have three days of grace to sell at prices favourable to them.
“However, the multiplier effect is that the Bureau de Change operators will benefit because they buy in millions from the CBN, while others buy only in thousands,” he said.
NAN recalls that the CBN directed banks on Jan. 13 to utilise funds purchased from the autonomous or inter-bank foreign exchange market within 72 hours from the value date.
The CBN said that failure to do so within the time frame means the funds will be re-purchased at the apex bank’s buying rate. (NAN)
Source : Leadership