In its continuous effort to defend the naira, the Central Bank of Nigeria (CBN) has just announced sales of fresh $10,000 to accredited Bureau De Change operators in the country.
It disclosed this in a circular uploaded to its website on Monday.
The apex bank said it is set to sell $10,000 to each BDCs at N1101/$ and directed the operators to sell at a spread not more than 1.5% above the CBN rate.
According to the circular seen by BUSINESS METRICS, in this round dollar sales, 1,588 BDCs shall be getting the morning after following the due process stipulated by the apex bank.
CBN said: “All eligible BDCs are therefore directed to commence payment of the Naira deposit to the underlisted CBN Naira Deposit Account Numbers from today, Monday April 08, 2024, and submit confirmation of payment with other necessary documentation for disbursement at the appropriate CBN Branches.”
Selling at this rate to the BDC is a move to further empower the local currency which is still in recovery mode after it was devalued in January.
Naira closed in the green region last week for the fourth consecutive week at ₦1,245 against the dollar amid amplified confidence in the naira.
The Nigerian local currency ended on Friday at ₦1,251.05/$1, according to data from the Nigerian Autonomous Foreign Exchange Market (NAFEM), up against the US dollar at the official window for the fourth straight trading day in April 2024.
Recall that CBN, led by Mr. Olayemi Cardoso has implemented several policies to increase local dollar liquidity and free up the naira.
These policies are helping the naira to defy dooms prediction in many quarters including the Economist Intelligence Unit (EIU) which earlier predicted that the naira would crash to as low and N2,000 per dollar, and probably remain down.
However, current fundamentals and price actions indicate that the Nigerian Naira faces significant resistance, especially when the US dollar is strengthening amid strong U.S economic data despite a hawkish CBN as the naira oscillates not too far from a key support level of ₦1200/$.
The Nigerian Central Bank raised the benchmark interest rate by 600 basis points to 24.75 percent this year in response to the country’s rapidly rising inflation. However, the CBN’s overall aggressive strategy has brought about some stability.
This strategy includes cracking down on the unofficial market and virtual service providers who are allegedly amplifying the naira’s weakness by driving demand for the dollar pegged USDT, Selling dollars to the BDCs to close arbitrage and clearing FX backlogs of $7 billion.
With the latest dollar sales supporting other policies, indications are rife that the naira may finally find its way to recovery below N1,000/$.
