Home BUSINESS BANKING & FINANCE Naira Strengthens Against Dollar, Speculators In Foreign Exchange Face Losses

Naira Strengthens Against Dollar, Speculators In Foreign Exchange Face Losses

The Central Bank of Nigeria (CBN) has announced the surge in Naira against the dollar, throwing speculators in Nigeria’s foreign exchange market into possible huge losses.

The surge in Naira against Dollar, according to a statement from the CBN is as a result of its interventions in the Investors and Exporters (I&E) window.

The statement said that prior to CBN’s renewed intervention in the I&E window on August 31, 2020, the Naira exchanged for as high as N480 to the dollar, prompting fears that the Naira was in a free fall.

It said that the Naira began to rebound against the dollar following an announcement by the CBN that it would also resume the sale of foreign exchange to operators of Bureau de Change (BDCs) from Monday, September 7.

“Compared to the previous days’ sales, the naira exchanged for N420 to a dollar in the BDC segment of the market on Wednesday, September 2, 2020, plunging speculators into losses, following their failure to heed warning signs from the CBN.”

The statement quoted the apex bank’s chief spokesman, Isaac Okorafor while speaking on the issue as saying that the Bank had concluded plans to inject liquidity into the foreign exchange market by selling forex to licensed BDC operators.

According to him, the sale to BDC would be gradual and be done twice a week – Mondays and Wednesdays, hence the BDCs had been directed to ensure that their accounts with their banks are adequately funded to ensure seamless transactions.

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While warning speculators to desist from what he termed unpatriotic tendencies, Okorafor urged registered BDCs to comply with the CBN guidelines as the Bank would not hesitate in sanctioning any erring dealer. He also assured that those requiring foreign exchange for purposes of travel, educational fees and other invisibles could obtain such over the counter from their respective banks.

Meanwhile, the President of the Association of Bureau de Change Operators of Nigeria (ABCON), Alhaji AminuGwadabe has expressed support for the CBN action, noting that the anticipated intervention in the BDC sector would ensure stability in the foreign exchange market.

According to him, speculators in the forex market have been dealt a huge blow with the sharp drop in the exchange rate, which he said would continue a downward trend with the resumption of international flights in and out of the country.

It will be recalled that the CBN, in a circular signed by its Director, Trade and Exchange Department, Dr. OzoemenaNnaji, on Thursday, August 27, had disclosed plans by the CBN to resume the sale of foreign exchange to BDCs as part of effort to enhance accessibility to foreign exchange.

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