Naira stabilises as currency dealers await CBN’s dollar supply

The naira on Tuesday stabilised against the dollar at the Bureaux de Change (BDC) segment of the foreign exchange market as operators await supply from the Central Bank of Nigeria (CBN) today, BusinessDay findings reveal.

After trading on Tuesday, naira closed at N220/$, the same as the previous day at the BDC segment. It gained N2/$ or 0.89 percent at the parallel market, closing at N222/$ compared with N224 the previous day.

However, at the inter-bank market, the local currency weakened slightly against the dollar by N0.11k or 0.06 percent as it closed at N197.72/$ as against N197.61/$ the previous day.

Investigations show that there would be intervention dollar supply to BDCs twice this week by the CBN aimed at strengthening the foreign exchange market.

A text message notifying the BDC operators about funding their dollar purchase reads: “To All BDCs: please be informed that, the CBN in its continuous effort to strengthen BDCs as monetary instruments for a stronger naira in the market and Association of Bureaux De Change of Nigeria (ABCON) in its effort also, wish to inform all our members as follow: 1. That there would be intervention fund on Wedesday 12 and Friday 14, August 2015. 2. Avoid speculations. 3. Render your returns accordingly; ensure compliance with all Regulatory Authorities.”

BDCs are allowed to sell up to $4,000 as personal travelling allowance and $5,000 as business travelling allowance. However, individuals sometimes buy above the stipulated dollar limit from the undocumented parallel market, Reuters reports.

The naira firmed to 215 on the parallel market last week after commercial lenders stop accepting hard currency cash deposits on central bank orders, fuelling excess dollar liquidity on the parallel market.

The CBN had also directed lenders to pay for dollars purchased at the official market 48 hours in advance, tightening naira liquidity.

Source : BusinessDay

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