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Naira stability expected as banks resume dollar sales to BDCs

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There is hope for naira users, especially those who patronise the parallel market and bureau de change (BDC) operators, over expected stability this week as the commercial banks resume autonomous sales to qualified BDCs.

Some BDCs were starved of dollar supply by some banks due to the processes involved in ascertaining the recapitalised institutions.
Consequently, foreign exchange rate rose significantly by N5.00k/$ and N3.50k/$ from N169/$ and N167.50/$ at parallel markets and BDC, respectively.

The CBN issued a new code of conduct to the 2,087 out of 3,500 bureau de change operators which were deemed to have satisfied the requirements for recapitalisation.

“This week we expect to see relative stability of the exchange rate as the commercial banks resume autonomous sales to qualified BDCs”, analysts at Cowry Assets Management Limited have said.

Last week, the central bank offered USD750 million but sold a total of USD730.79 million (or N113.81 billion) to end users at the Retail Dutch Auction (RDAS), an increase of 13.45% above the USD644.15 million sold last week. Consequently, the official USD/naira rate held steady at N155.73/$1. The exchange rate fell by 0.25% (N0.41) to N162.54/$1 at the interbank market, amid sales of USD60.7 million by multinational oil company, Chevron, and undisclosed sums by Royal Dutch Shell and NNPC. In the alternative market segments, the local currency held steady at N171.00/$1 at the bureau de change market, suggesting hangover from the recapitalisation exercise recently concluded by the apex bank. Also, the local currency eased slightly by 0.29% (N0.5) to N172.50/$1 at the parallel market.

On the other hand, interbank rates are expected to fall this week following expected Federal Accounts Allocation Committee (FAAC) inflows and significant inflows from maturing treasury bills.

The apex bank will within this week auction treasury bills worth N70.65 billion via the primary market, viz: 91-day bills worth N40.65 billion; and 182-day bills worth N30.00 billion on Wednesday; also an equivalent amount of treasury bills of same maturities will be redeemed, via the primary market.

Article Credit: Businessdayonline

Updated 4 Years ago

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Tags:     BDC     FAAC