Exchange rate: Naira flat amid cooling demand pressure

…Trades at N860/$ ahead of new guideline for importers, BDCs

By Sodiq Adelakun

Naira has for the past three days remained flat at N860/$ amid cooling demand pressure at the parallel segment of the market.

Parallel market FX dealers, on Monday August 21, bought and sold dollar to customers at N855 and N860, almost same with last Thursday August 17 when they bought the greenback at N840 and sold at N860.

The Naira had in the trading week to August 18 gained ground by 48 basis points (bps) to close at N739.52/$ at I&E FX Window from N740.60/$ the preceding week.

The Central Bank of Nigeria recently announced the commencement of the Price Verification System Portal (PVS) as requisite for Form ‘M’ application.

The apex bank also announced the operational mechanism for Bureau De Change Operations in Nigeria.

For BDCs, the CBN said among others that the spread on buying and selling by BDC Operators shall be within an allowable limit of -2.5per cent to +2.5 per cent of the Nigerian foreign exchange market window weighted average rate of the previous day.

This is in addition to mandatory rendition of BDC Operators statutory period reports on the Financial Institution Foreign Rendition System (FIFX).

CBN said that from August 31, all applications for Form ‘M,’ which is the declaration of intention to import goods into Nigeria, shall be accompanied by a valid Price Verification report from the PVS portal. With the PVS, the apex bank could distinguish those who genuinely need forex and halt the crisis in the sector.

“We expect to see the appreciation of the Naira continue as the CBN continues to implement its recent FX policies,” said United Capital Research analysts, who also expect continued pressure on the Naira across all market segments, “given that FX pressures will persist as Dollar earnings remain weak.”