With the new exchange rate directive by the Central Bank of Nigeria (CBN),Naira has depreciated by N26 to N386 per dollar from N360/$ since June 2018 at the Bureau De Change (BDC) segment of the foreign exchange market.
The CBN on Thursday informed the general public that gradual sales of foreign exchange to licensed BDC operators will commence with effect from September 7, 2010.
Consequently, the CBN also in a circular signed by Ozoemena Nnaji, director, trade and exchange department, announced the applicable exchange rate for the disbursement of International Monetary Transfer Operators (IMTOs) proceeds as follows: IMTOs to sell to banks at N382 per dollar, banks to CBN at N383 per dollar, CBN to BDCs at N384 per dollar, and BDCs to end-users at not more than N386 per dollar.
When contacted by BusinessDay on the new directive, Aminu Gwadabe, national president, Association of Bureau De Change Operators of Nigeria (ABCON) said “it is a regulatory obligations not only limited to our sector but importers and exporters alike.”
He said luckily the announcement of resumption of sales to BDCs has sent a strong fear to both speculators and hoarders as Naira rebounds with N5 strength as the dollar closed from N477/$ to N470/$ on Friday.
“We expect further strength of the local currency next week as BDCs resume fully in business,” Gwadabe told BusinessDay.
The foreign exchange market opened on Friday with an indicative rate of N386.93k, which showed N0.78k depreciation when compared with N386.15k opened with on Thursday on the Investors and Exporters (I&E) forex window, data from FMDQ revealed.
At the I&E FX window, relatively lower volume passed through the market, due to tightened system liquidity. Naira appreciated marginally by 0.02 percent as the dollar was quoted at N385.67 as against the last close of N385.75 per dollar. Analysts at FSDH said most participants maintained bids between N380.00 and N393.05 per dollar.
According to the CBN’s circular, purchase of foreign exchange by BDCs shall be on Mondays, and Wednesdays in the first instance. The BDCs are to ensure that their accounts with the banks are duly funded with the equivalent Naira proceeds on Fridays and Tuesdays accordingly.
The CBN urged authorised dealers (deposit money banks) to continue to sell foreign currencies for travel related invisible transactions to customers and non-customers over the counter upon presentation of relevant travel documents (passport, air ticket and visa).
At the money market, nigerian treasury bills (NT-Bills) market closed on a negative note on Friday with average yield across the curve increasing by 8 bps to close at 2.02 percent, a report by FSDH research stated.
The Overnight (O/N) rate increased by 12.90 percent to close at 14.90 percent on Friday. The Open Buy Back (OBB) rate also increased by 12.40 percent to close at 13.90 percent.
In the Open Market Operation (OMO) bills market, the average yield across the curve declined by 1 basis point to close at 3.12 percent.
The FGN bond market closed on a positive note Friday, as the average bond yield across the curve cleared lower by 6 bps to close at 4.74 percent
On August 27, the NSE listed FGN JUL 2045 Bonds (worth N75.0 billion), which were issued by the Debt Management Office (DMO) on behalf of the Federal Government in July 2020. The 25 Year FGN Bond has a coupon rate of 9.80 percent, which will be paid on a semi-annual basis (on every January 24 and July 24 of the year) with the maturity date on July 24, 2045.
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