The naira strengthened to N435 to a dollar at the parallel market yesterday as against about N480 to a dollar it had been trading in the past days.
This showed a gain of N45, representing about 9.3 per cent rise.
Currency dealers attributed the development to the planned resumption of forex sales by the Central Bank of Nigeria (CBN) to operators of Bureau De Change (BDC), which according to them is expected to bolster dollar liquidity in the market.
The apex bank is expected to resume forex sales to BDCs on Monday
It had announced its intention to resume forex sales to the retail segment of the market, but was forced to postpone it because of the extension of the date for resumption of international flights to September 5.
Speaking yesterday with journalists, the President, Association of Bureau De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, said the announcement of the plan to resume forex sales to the currency dealers was the major factor that led to the gain recorded by the nation’s currency against the greenback.
He said: “The plan to resume forex sales to BDCs was what broke the camel’s back. Dollar supply to BDCs is a potent weapon to fight against speculation. For those still speculating in the market, they are already burning their fingers and taking losses.
“So, my advice is that when you don’t have a genuine and effective need to use dollars, stop stockpiling the currency. From what we are seeing, this trajectory is going to continue and I advise members of the public to always buy when you have a purpose for it and not buying to keep.
“What we saw in the market in the past few weeks was not a true reflection of the value of the naira against the dollar. We saw, even during the lockdown when flights were not flying, everybody literally became a forex dealer. It is unfortunate. That cannot happen in other countries. When you don’t need to make payments abroad, what are you hoarding dollars for? It’s unfortunate.”
He expressed optimism that once his members re-commence business by Monday, the naira exchange rate at the parallel market would improve further.
“With just a pronouncement, you can see the impact. So, once we are back, we expect the naira to appreciate further,” he added.
The currency dealer foresees the naira strengthening further to “between N415 to N420 to a dollar next week,” saying “the trajectory is expected to continue towards the unified rate of the BDC and Investors and Exporters window, which is about N386 to a dollar.”
Gwadabe added: “That is the target that all the operators in the forex market, that is the BDCs, the banks, the I & E window, are targeting. So, speculators like I told you would continue to count their losses. This is not the time to hoard, to speculate or even to undermine the dexterity of CBN management.”
He also urged security agents to check the illegal movement of dollar cash with the resumption of international flights on September 5.
CBN had in a circular dated August 27, 2020, addressed to all authorised dealers, BDC operators and members of the public, said the resumption of forex sales was part of efforts to enhance accessibility of the greenback, particularly to travellers following the announcement of the limited resumption of international flights.
Purchase of forex by BDCs shall be on Monday, and Wednesdays in the first instance, it had stated.
According to the apex bank, BDCs are expected to “ensure that their accounts with the banks are duly funded with the equivalent naira proceeds on Fridays and Tuesdays accordingly.”