…plans to resume forex sales to BDCs
The Central Bank of Nigeria (CBN) announced that it has resumed the provision of foreign exchange to all commercial banks for onward sales to parents wishing to pay schools fees and Small and Medium Enterprises (SMEs) seeking to make payment for essential imports needed to revive economic activities across the country.
The apex bank stated this in a statement signed by its Director, Corporate Communications Department, Mr. Isaac Okorafor, which was made available to reporters. Specifically, the CBN said it has resumed the provision of over $100 million per week for both categories of forex users, adding that it has also concluded arrangements to resume foreign exchange sales to the Bureaux De Change (BDC) segment of the market for business travels, personal travels and other designated retail uses, as soon as international flights resume.
The regulator stated that its resumption of forex sales to commercial banks for the use of the aforementioned categories of forex users underscores its commitment to adequately meeting the needs of all legitimate users and thus, there is no need for any end-user to resort to illegal forex sources.
The CBN said: “In view of the gradual easing of the COVID-19 lockdown both globally and in Nigeria, the CBN has resumed provision of foreign exchange to all commercial banks for onward sales to parents wishing to pay schools fees and SMEs wishing to make essential imports needed to revamp economic activities across the country. “In particular, the CBN is resuming the provision of over $100 million per week for both categories.
The CBN has also 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. “With these actions, the CBN wishes to reiterate that it is adequately meeting the needs of all legitimate users, and our continued capacity to do so should not be in doubt.
There is, therefore, no need for panic by any end-user that could necessitate recourse to illegitimate sources and spike in foreign exchange rates.” The CBN said that it has stepped up its surveillance of the foreign exchange markets for speculators, smugglers and other illegal users, warning that it “will take decisive actions against anyone/institutions involved in such nefarious activities.”
Analysts point out that the naira has been on a steady decline against the dollar on the parallel market in recent weeks, falling from N390 to the greenback late last month to N470/$1 on Tuesday.
According to analysts at AZA, the crash in oil prices has sent the naira crashing to its weakest level on the parallel market since 2017. Analysts said: “We foresee further pressure on the naira after last week’s 7% slide, as a result of declining export revenue combined with deepening economic fallout from coronavirus.
The pursuit of dollars is exacerbated by demand from foreign investors unable to repatriate funds.” In the wake of the slump in oil prices, the CBN, on March 20, devalued the official naira exchange rate from N307 to N360 to a dollar and also weakened it on the Investors and Exporters (I&W) window as well as the BDC segment of the market at N366 to N380 to a dollar and N360 to N380 per dollar respectively.
Analysts note that apart from low dollar inflow due to low prices of crude oil (which is the country’s main foreign exchange earner), capital flight as a result of foreign investors’ concern about the coronavirus pandemic, coupled with the CBN’s suspension of sales of foreign exchange to BDC operators, has worsened forex scarcity in the system.