The Nigerian Naira has seen a sharp increase in value over the past 5 days as it went from exchanging at N480 per dollar to N420 at the parallel market. This improved exchange rate has been as a result of the interventions made by the Central Bank of Nigeria in the Investors and Exporters window.
Recall that the Central Bank of Nigeria (CBN) had suspended foreign exchange sales to Bureau De Change (BDC) operators back in March 2020, following the outbreak of the Coronavirus and its impact the economy and the crash in the oil prices and radical change in the operations of businesses and industries around the world.
The CBN also noted that the suspension follows the government’s directive to restrict gatherings to not more than 20 persons as parts of measures aimed at reducing person-to-person contact and curbing the transmission of the coronavirus (COVID-19).
Prior to CBN’s intervention, the naira had kept losing value against the dollar as it exchanged for as high as N480 per dollar few days back. The apex bank further stated that it would also resume the sale of foreign exchange to operators of Bureau de Change from September 7.
In statement titled, “Forex: Speculators set to count losses,” the Director, Corporate Communications Department at the CBN, Isaac Okorafor, disclosed the bank had concluded plans to inject liquidity into the foreign exchange market by selling forex to licensed BDC operators.
He said the sale to BDCs would be gradual and be done twice a week, Mondays and Wednesdays, and that the BDCs had been directed to ensure that their accounts with their banks were adequately funded to ensure seamless transactions.
Meanwhile, the President of the Association of Bureau de Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe has expressed support for the CBN action, noting that the anticipated intervention in the BDC sector would ensure stability in the foreign exchange market.
According to him, speculators in the forex market have been dealt a huge blow with the sharp drop in the exchange rate, which he said would continue a downward trend with the resumption of international flights in and out of the country.
It will be recalled that the CBN, a circular signed by its Director, Trade and Exchange Department, Dr. Ozoemena Nnaji, on Thursday, August 27, 2020, revealed plans by the CBN to resume the sale of foreign exchange to BDCs as part of effort to enhance accessibility to foreign exchange.