Naira weakens by N3.50k as BDC await second allocation

Nigeria’s currency on Wednesday weakened by N3.50k to an average rate of N443.50k per dollar from N440 on Tuesday on the black market.

The depreciation was due to speculative activities of traders as the Bureau De Change (BDC) operators had yesterday funded their account in anticipation for the second tranche of the dollar allocation by the Central Bank of Nigeria (CBN).

The CBN had in August 27, 2020 circular said the purchase of foreign exchange by BDCS shall be on Mondays, and Wednesdays in the first instance. The BDCS are to ensure that their accounts with the banks are duly funded with the equivalent Naira proceeds on Fridays and Tuesdays accordingly.

Investigation shows that dollar was going for N442 (selling/traders) and N438 (buying/traders) on Wednesday as against N435 (selling) and N430 (buying) at Festac.

At Eko Hotel the greenback was trading at N445 (selling) and N438 (buying) on Monday from N440 (selling) and N435 (buying).

The foreign exchange market at the investors and exporters (I&E) forex window, opened with an indicative rate of N386.46k on Wednesday. This signalled a marginal appreciation of N0.02k when compared with N386.48k opened with on Tuesday.

After trading on Wednesday, the market closed with the dollar being quoted at N386.00k, representing an appreciation of N0.21k over N386.21k quoted on the previous day at the I&E window, data from FMDQ indicated.

The CBN is expected to allocate another $10,000 to each of the over 5,000 BDCS on Friday. The CBN chose a gradual foreign exchange supply of $10,000 twice a week to BDCS to edge out speculation in the market.

With the new amount of FX allocation, the BDCS are losing about 73.3 percent or $55,000 when compared to $75,000 they were getting from the CBN before the outbreak of Covid-19 pandemic.