Naira sustains gains at both parallel, official market

The naira, on Monday, appreciated further at the parallel section of the foreign exchange (FX) market.

Currency traders in Lagos, also known as bureau de change (BDCs) operators, quoted the naira at N1,440 to the greenback at the street market.

The traders put the buying price of the dollar at N1,400 and the selling price at N1,440 — leaving a profit margin of N40.

The figure represents an appreciation of N30 or  2.04 percent from the N1,470/$ it traded on March 22.

At the FMDQ Exchange, a platform that oversees official foreign exchange (FX) trading in Nigeria, the local currency rose by 1.64 percent or N23.41 to N1,408.08/$ on Monday — from N1,431.49/$ on March 22.

Meanwhile, the Central Bank of Nigeria (CBN) announced the second tranche of sales of foreign exchange (FX) to bureau de change (BDC) operators.

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CBN disclosed this in a circular titled ‘Sales Of FX To Meet Retail Market Demand For Eligible Invisible Transactions’ and addressed to the president, Association of Bureau De Change Operators of Nigeria (ABCON) on March 25.

This development is coming nearly one month after the first announcement of sales.

On February 27, the apex bank resumed the sale of FOREX to BDCs.

At the first tranche, each “eligible” BDC was allocated $20,000 at the rate of “N1,301/$ (representing the lower band rate of executed spot transactions at NAFEM for the previous trading day, as at today, 27th February 2024)”.

However, in the recent circular, signed by Hassan Mahmud, CBN director, trade and exchange department, the apex bank said the second tranche requires BDCs to sell to eligible end users at a spread of not more than 1.5 percent above the purchase price.

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In the second tranche, CBN sold $10,000 to each BDC at the rate of N1,251/$.

CBN said: “We refer to our letter to you referenced TED/DIR/CON/GOM/001/071 in respect of the above subject wherein the CBN approved a second tranche of sale of FX to eligible BDCs.”

“We write to inform you of the sale of $10,000 to each BDC at the rate of N1,251/$1. The BDCs are to sell to eligible end users at a spread of not more than 1.5 per cent above the purchase price.

“All eligible BDCs are directed to make the naira payment to the underlisted CBN naira deposit account numbers before close of business on Thursday March 28, 2024, and submit confirmation of payment, with other necessary documentation, for disbursement at the appropriate CBN branches.”

The apex bank also said any BDC that breaches the above terms shall be sanctioned appropriately, including outright suspension from further participation in the sale.