The naira, which reversed its gains on Thursday and Friday last week, is seen to strengthen again this week in spite of the declining external reserves and speculative activities in the market, according to analysts in the financial services sector.
The value of the naira dropped on Friday to N390 per dollar, which was N15 lower than N375/$ quoted early in the week at the black market.
The Central Bank of Nigeria (CBN) was worried that customers seeking to buy dollars for Personal Travel Allowance (PTA), Business Travel Allowance (BTA), tuition and medical fees were being frustrated by some banks with the false claim that the CBN was not allocating enough forex to them.
The CBN on Friday declared such claim totally untrue. “This claim is totally untrue. All banks have more than enough stock of forex in their possession for the purpose of meeting genuine customers’ demand for BTA, PTA, tuition and medical fees. Indeed, on a weekly basis, the CBN has been selling at least $80 million to banks for onward sale to their customers for these invisible items,” Isaac Okorafor, acting director, corporate communications, CBN, said in statement.
He advised members of the public seeking to buy forex for the above-mentioned purposes to go to their banks and obtain their forex, saying, “Any customer who is not attended to within 24 hours for BTA/PTA or 48 hours for tuition and medical fees should call 07002255226 or send an email to cpd@cbn.gov.ng, with the name and branch of the non-cooperating bank.
“Furthermore, no customer should accept to buy forex from any bank at more than the currently prescribed rate of N360/$1.”
The external reserves, which have risen 16.1 percent since the start of the year, stood at $30.29 billion by March 29, but are still far off their peak of $64 billion, hit in August 2008.
“We expect further stability in the foreign exchange market with possible appreciation against the USD subject to CBN’s level of intervention,” analysts at Cowry Asset Management Limited said.
Analysts at Afrinvest Securities Limited said, “We expect market rates to continue to appreciate until the CBN attains a market reopening rate.”
After sustaining intervention in the currency market to achieve a convergence between official and unofficial rates, the CBN issued a directive to Deposit Money Banks (DMBs) on Monday to sell forex for BTA, PTA, School and medical fees to retail users at N360/$1, from the N375/$1 it sold in the previous week.
The apex bank sold to DMBs at N357/$1, while Bureaux de Change (BDCs) who are to sell to end-users at N362/$1 were sold to at N360/$1. A sum of $100 million wholesale forward intervention was offered and fully allotted to banks on Monday while another $100 million was offered to wholesale dealers on Thursday.
On Thursday, the CBN announced its decision to commence bi-weekly dollar sales to licensed BDCs operators from Monday, April 3, 2017. Sales amount to BDCs will also be increased to $10,000.00 ($5,000/bid) at a new rate that will be announced on Monday. Licensed BDCs are to fund their accounts on Mondays and Wednesdays while they receive their purchases on Tuesdays and Thursdays, respectively.
