The dollar supply to the Bureau De Change operators (BDCs) by the Central Bank of Nigeria (CBN) has accumulated to about $3.18 billion in two months.
This is as a result of the suspension of dollar sales to BDCs following the Covid-19 lockdown. What this means is that the accumulated amount has helped in building the foreign exchange reserves, giving the CBN more firepower to defend the Naira.
Nigeria’s external reserves have increased by 9.19 percent to $36.49 billion as at May 28, 2020 from $33.42 billion as of April 29, 2020, data from the CBN’s website shows.
The CBN sales $20,000 to each BDC operator numbering over 5,300 members three times every week including Mondays, Wednesdays and Fridays.
Also, on November 30, 2018, the CBN introduced special intervention of cash dollar sales to the tune of $15,000 to each BDC operator every Thursdays.
“It is accumulating in the reserves. It is from the reserves that the CBN sells dollars to BDCs. If it is not selling, it is building back the reserves,” Johnson Chukwu, managing director/CEO, Cowry Asset Management Limitd said.
The Monetary Policy Committee (MPC) noted in its meeting on Thursday the improvement in crude oil prices which stood at about US$34.8 per barrel as at 28th May 2020.
Godwin Emefiele, governor of the CBN, said the moderate recovery in crude oil prices would reduce the pressure on the external reserves and government revenue.
One dollar is currently trading at N435, which represents N10 gain for Naira when compared with N445 traded on Friday on the black market.
The reason for the Naira appreciation is increased dollar liquidity and low demand as currency hoarders are bringing out dollars on hearing the news of the CBN resuming dollar sales to Bureau De Change (BDCs).
This implies that foreign exchange users will have enough dollars at a reasonable rate to meet their obligations.
Chukwu attributed the Naira appreciation to the confidence engendered by the CBN governor who said the reserves have accrued and that the CBN will be in a position to defend the Naira.
He said there is low demand for dollars by importers and in absence of travel, demand has moderated as people are not placing new orders.
CBN said on April 29, 2020 that it has made complete arrangements to resume foreign exchange sales to the BDC segment of the market for business travels, personal travels, and other designated retail uses, as soon as international flights resume.
Expectations are high that the Federal Government may ease border restrictions this week. The Federal Government on March 2020, banned entry to arrivals from 13 of the countries worst affected by the coronavirus epidemic.
Chukwu admitted that many countries have begun to lift some restrictions on travel but thinks the first thing governing needs to do is lift the restrictions in phases. This means that Government can lift the restrictions on local flights first and subsequently the International flight.
The CBN on April 29, 2020 resumed dollar sales for school fees and Small and Medium Enterprises (SMEs).
