Naira falls after CBN stops Forex sales to BDCs

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The Naira dipped slightly against the US dollar in the parallel market after the Central Bank of Nigeria (CBN) declared that it would no longer sell foreign currency to Bureau De Change (BDC) operators.

According to the bank, the parallel market has become a conduit for illegal forex flows and graft.

The CBN also stated that it will halt the processing of applications for BDC licenses in the country.

The CBN governor, Godwin Emefiele, revealed this during a live TV broadcast while announcing that the bank’s benchmark policy rate has been maintained. He also stated that the CBN’s weekly foreign exchange sales will now flow directly to commercial banks.

According to data compiled by abokiFX.com, a website that collates parallel market rates in Lagos, the naira finished at N505.00 per $1 on Tuesday, down N1.00 or 0.20 percent from the previous session’s rate of N504.00.

On Tuesday, the local currency declined against the dollar in the official market sector, according to data from the FMDQ Security Exchange, where FX is officially transacted.

According to data posted, the naira closed at N411.67 per $1 on Tuesday, this represents a N0.17 or 0.04 per cent depreciation from N411.50, the rate it exchanged hands with the hard currency in the previous session on Monday.

This was reflected in FX turnover, which fell 17.10 percent to $115.67 million at the end of the market session, down from $139.49 million the previous session on Monday.

The currency hit an intraday low of N412.95 and oscillated to a high of N387.67 before closing at N411.67 on Tuesday.

The spread between the official market and the parallel market segment rates is pegged at N93.33, translating to a margin of 18.50 per cent as of the close of business Tuesday.