Naira Hits N171 Per Dollar as Banks Halt Sale of Forex

The Naira has hit N171 to one United States dollar at the Bureau-de-changes (BDCs), only outlets currently selling to the public besides the parallel market.

Banks are currently reluctant to sell foreign exchange, especially the dollar to the public putting severe pressure on the Naira.

The Naira exchange rate stood at N158.54 at the interbank market despite dollar sales by the Central Bank of Nigeria (CBN) and oil companies.

The Leadership Newspapers however found that the Naira weakened to N171 to the United States dollar at the BDCs by the close of activities yesterday.

According to the newspaper t since Monday this week, banks have not been selling forex exchange to the public, thus forcing customers to rely on the BDC and the parallel market for their supply.

A BDC operator, said that the drop in value at the BDC was not unconnected to the various policies of the CBN on foreign exchange sale which has led to only a few banks selling forex.

Recall that the CBN in October this year reintroduced the Retail Dutch Auction System, which means that banks can no loner buy forex in bulk to sell to importers and the public but must buy according to the specific demand of its customers as documented and approved by the CBN.

Another BDC operator said that the approaching festive season may be one of the reasons for the weakening of the Naira.

Mr Wale Abe, chief executive of the Financial Market Dealers Association (FMDA) told The Leadership via telephone he could not confirm whether we’re selling or not.

The inter-bank depreciation according to Kunle Ezun of Ecobank Nigeria partly reflected strong and robust dollar demand from manufacturing and energy sectors to cover import bills and other forex obligations.

He explained further that the naira remained under pressure due to structural imbalance between dollar supply and demand; and lower US oil demand.

The CBN had offered $400 million each at the two Retail Dutch Auction (RDAS) on Monday and Wednesday this week at N155.72 to the dollar. Ezun noted that the “twice weekly CBN’s RDAS continues to be influenced by 26 Sep circular regarding USD sales to small scale importers.”

Meanwhile the interbank offer rates decline after a rise on Wednesday. Call rate at Nigeria Interbank Offer Rate (NIBOR) dropped to 10.95  per cent yesterday from 12.33 per cent while 7-day rate closed at 11.16 per cent from 12.37 per cent.

Likewise, 30-, 60 and 90-day rates dropped to 11.79, 12.25 and 12.58 per cents from 12.83, 13.16 and 13.45 per cents respectively.