Naira heads for gain against dollar as CBN resumes forex sales

The restart of foreign exchange sales by the Central Bank of Nigeria (CBN) to Bureaux De Change (BDCs) on Monday is anticipated to strengthen the naira against the dollar, according to operators.

In the last week of August, the apex bank had said in a circular it would resume forex sales to BDC operators in a bid to improve accessibility to foreign exchange in the country.

Last Friday, dollar traded N420 to a dollar on the black market relative to the exchange rate of N480 as the currency market improved gradually from a grave liquidity crunch that has plunged the local currency to its all-time low against the greenback.

That same day, naira opened for trade at N385.50 per dollar on the over-the-counter spot market after it closed at N381 at the previous session, Reuters said.

Traders, according to Reuters, see naira emerging stronger on the black market following a rally against in the unofficial market last week as the CBN sold dollars to foreign investors to clear heaps of forex demands.

Read also: CBN sells $50m to measure foreign forex demand

The CBN has increasingly restarted dollar sales after it called off supplies after a coronavirus-induced lockdown was ordered by government in a move aimed at flattening the curve of the virus spread.

Last week, the regulator sold about $50 million to international investors on the spot and forward markets in a test trade to gauge the demand level and said it would recommence sales to retail currency operators this week.

“The anticipated intervention in the BDC sector will ensure stability in the foreign exchange market,” said Aminu Gwadabe, President Association of Bureaux De Change Operators of Nigeria (ABCON).

He added that forex market speculators had been enormously affected by the steep fall in exchange rate, which he believed would sustain its downward trajectory with the resumption of international flights in and out of the country.

Isaac Okorafor, the CBN spokesperson, assured that those seeking forex for purposes like travel, educational fees and other invisible trades could obtain such over the counter from their respective banks.

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