CBN Holds Special Intervention for BDCs Thursday to Meet Spiking Parallel Market Demand

Obinna Chima

As part of efforts to sustain dollar liquidity in the foreign exchange (FX) market, the Central Bank of Nigeria (CBN) wednesday disclosed plans to hold a special intervention in the Bureau de Change (BDC) segment of the market thursday.

This is just as findings showed that the country’s external reserves increased by $21 million to $30.318 billion as of April 4, compared to $30.297 billion on March 31.

Disclosing this in Abuja, wednesday CBN spokesman, Isaac Okorafor, said the special intervention of $10,000 for BDCs was meant to meet the upsurge in forex requests of low-end customers, which has been on the rise in recent days.

According to him, the special intervention did not in any way contradict the CBN’s newly amended sale policy of selling not more than $10,000 only to BDCs once a week.

He further explained that the intervention arose due to the increasing demand for forex by Nigerians to address other legitimate needs.

The CBN spokesman also disclosed to journalists that the CBN was collating retail requests from authorised dealers upon which sales would be finalised.

The move by the central bank is expected to tame the rising demand for FX on the parallel market which led to the depreciation of the naira yesterday.

The nation’s currency fell to N397 to the dollar yesterday, as against N390 the previous day.

The CBN on Tuesday fulfilled its commitment to sell $10,000 to BDCs in line with its new policy.

In addition, auhorised FX dealers fully subscribed to the $150 million offered by the CBN at its auction on the interbank wholesale window on Tuesday. Also, the central bank revealed Tuesday that it will offer dollar forwards to be delivered within two months to offset a backlog of matured foreign exchange obligations to manufacturers, airlines, fuel importers and agriculture businesses.

The bank had last Monday offered $150 million wholesale forwards to banks and said it also released $90 million for invisible transactions to ensure liquidity in the forex market.

The CBN, since February 21, has made over 10 offers in the interbank wholesale market ranging from $100 million to $500million per auction. The last three auctions ranging from $100million to $150 million were fully subscribed.