On Thursday, the illicit market saw the Nigerian naira drop to N1,400 versus the US dollar as a result of fresh demand pressure in the foreign currency (FX) market.
When comparing the current currency rate to the N1,125 per dollar quoted on April 12, 2023 on the parallel market, often known as the black market, the naira has lost 19.64 percent in just two weeks.
Wednesday’s naira depreciation at the Nigerian Autonomous Foreign Exchange Market (NAFEM) was N1,308.52 per US dollar.
Based on data from the FMDQ Securities Exchange, the naira has depreciated 12.69 percent from N1,142.38 per dollar to the level on April 12, 2024, in the last two weeks. Insufficient hedging exposes overseas investors.
This week, the naira has depreciated as dollar liquidity has decreased due to the withdrawal of certain foreign portfolio investors who were alarmed by the Israel-Hamas conflict and a rising dollar.
$15.83 million was approved by the Central Bank of Nigeria (CBN) on Monday for distribution to 1,583 Bureau De Change (BDC) Operators. The CBN announced the distribution of $10,000 to Bureau De Change operators nationwide in a letter to BDCs.
The allocation, which has a rate of N1,021 per US dollar, aims to guarantee foreign currency accessibility for qualified end users and stabilise the foreign exchange market.
In a letter to the President Association of Bureau De Change Operators of Nigeria, the CBN stated that, as of Monday, April 22, 2024, all qualified BDCs are expected to begin making Naira deposit payments to the designated CBN Naira Deposit Account Numbers.
The CBN will release foreign exchange at the appropriate CBN branches upon receipt of the required paperwork and confirmation of payment. The rule makes clear that BDCs must sell the foreign currency allotted to qualified end users at a margin that does not go over 1.5 percent above the acquisition price. By ensuring fair pricing and transparency in the foreign currency market, this action will help end users and BDC operators alike.
Director of the CBN’s trade and exchange division Hassan Mahmud emphasised how crucial it is that BDCs follow the guidelines and prior communications’ terms and conditions.
The CBN’s most recent action is in line with its continued efforts to maintain market stability, advance transparency, and make foreign exchange more accessible to Nigerian citizens and companies. It is anticipated that the $10,000 given to BDC operators will boost the economy, especially by promoting foreign investment and commerce, according to the BDC operator.