Naira Sinks to N1300 despite FX Sales to BDCs

The naira weakened against US dollar at the Nigerian Autonomous Foreign Exchange market (NAFEM) due to squeezed foreign currency liquidity at the time the market recorded an increased demand.

In the parallel market, exchange rate has started to claw back losses after the apex bank sold foreign currency to FX traders in the informal segment.

FX spot rate at the parallel market has started trading around N1230 -1250 early in the midweek as Central Bank of Nigeria (CBN) asked BDCs to bid for $10,000 at subsided spot rate of N1,021. 

According to FMDQ Securities Exchange, exchange rate slipped by 5.1% to close at N1300.15 per US dollar at the official window of the Central Bank.

Last month, Naira pared back losses against the dominant US dollar to sub NGN1400 levels within the official section DUE to improve USD liquidity and CBN interventions within the N1300–1400/$ corridor.

While the authority denied defending the naira, FX subsidies at the informal segment have helped the official rate to reclaim value. Some manufacturers, and importers told MarketForces Africa that sometimes they channel FX requests to informal currency traders when there is an insufficient amount in the official market.

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To them, the Bureau de Change or the informal currency traders are less bureaucratic and timely for some transactions that cannot really wait for banks to process for final approval.

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