The naira fell to 242 against the United States dollar at the parallel market on Monday after the Central Bank of Nigeria cut dollar supply to Bureaux de Change operators in a bid to conserve the external reserves.
The naira, which traded at 238 against the dollar on the streets of the nation’s major cities on Friday, depreciated considerably as demand overwhelmed supply at the black market and the BDC segment on Monday.
For some weeks, the naira had traded between 230 and 234 to the dollar at the parallel market.
The local currency has, however, remained unchanged at 197 to the dollar on the official interbank market.
Foreign exchange dealers told our correspondent on Monday that the CBN suspended its weekly intervention in the BDC segment on Thursday.
The CBN sells $60,000 to each BDC operators in its twice-weekly intervention in that segment and is expected to save about $180m every week when it eventually stops dollar sale intervention to the BDCs.
“The central bank has reduced the amount of dollar sold to bureaux de change at its twice-weekly intervention, which has also been cut to once a week now,” a BDC operator, Harrison Owoh, told Reuters
He said the reduction in volume of dollar sale by the central bank coupled with year-end surge in demand for foreign currencies by importers had impacted negatively on the local currency.
The President, Association of Bureau De Change Operators, Alhaji Aminu Gwadabe, confirmed the development.
He said the central bank had announced last Thursday its decision not to intervene in the BDC market on Friday.
He was uncertain if the action was permanent or temporary.
However, the CBN Governor, Mr. Godwin Emefiele, said on Friday that the bank was saving $100m every week from its weekly dollar sales to the BDCs.
According to him, the number of the BDCs buying dollars from the CBN has reduced by about 50 per cent since the introduction of the Bank Verification Number as a requirement for forex transactions.
Emefiele said, “We have seen the number of the BDC operators who purchase forex from the central bank every week drop from an average of about 2,886 to just below 1,200 BDCs, thereby giving the CBN forex savings of almost $100m per week.
“This policy seems to have chased away unscrupulous BDC operators and allows only genuine operators to remain in the market. Domestic production of excluded items such as tomato paste, rice, fish, aluminium items and others are picking up gradually. Despite the sharp drop in inflows, our foreign exchange reserves are still at about $30bn, which is enough to cover about six months’ of imports as against the traditional benchmark of three months.