Naira gains slightly, as CBN steps up dollar sales

As the Central Bank of Nigeria (CBN) stepped up dollar sales on the inter bank foreign exchange market, the nation’s currency, the Naira on Tuesday gained a total of four points from 520 to a dollar it traded on Monday to close at 516 at the parallel market.

The local currency, however, remained steady against other major foreign currencies. For instance, it was sold at N635 against the Pound sterling, the same rate it traded the previous day and N545 per Euro, respectively at the parallel market.

Also, at the official interbank currency market, the naira stood at 305.25 the same amount it closed on Monday.

It would be recall that in a bid to ease the difficulties encountered by Nigerians in obtaining funds for Foreign Exchange transactions, the apex bank on Monday said it will commenced additional foreign exchange (FX) funding to commercial banks to meet customers’ Business Travel and personal, Medical, and School fees demands.

The bank’s spokesperson, Mr. Isaac Okorafor in a statement said, such retail transactions are expected to be settled at a rate not exceeding 20 per cent above the interbank market rate.

The statement signed by Okorafor, said, “Having cleared the historic backlog of matured letters of credit at the inception of the current flexible exchange rate system, the CBN would immediately begin to provide foreign exchange to all commercial banks to meet the needs of both personal travel allowances (PTA) and business travel allowances (BTA) for onward sale to customers. All banks would receive amounts commensurate with their demand per week, which would be sold to customers who meet usual basic documentary requirements.”

He explained that CBN would meet the needs of parents, guardians and sponsors who are seeking to make payments of school and educational fees for their children and wards.

He noted that CBN has decided to significantly reduce the tenor of its forward sales from the current maximum cycle of 180 days, to no more than 60 days from the date of transaction.
Explaining further, he disclosed that, “In order to further ease the burden of travellers and ensure that transactions are settled at much more competitive exchange rates, the CBN hereby directs all banks to open FX retail outlets at major airports as soon as logistics permit.”

While explaining on the increased efficiency of foreign exchange market, he said, “CBN will immediately begin implementing its articulated program to clear all the unfilled orders in the interbank foreign exchange market; Given our plan to meet all unfilled orders, and while provision of foreign exchange to the manufacturing sector would remain the CBN’s strong priority, we will no longer impose allocation/utilization rules on commercial banks; Implement an effective intervention programme to support the inter-bank market to ensure adequate liquidity necessary to deliver an efficient foreign exchange market; and advise FMDQ to activate its foreign exchange Order-Book systems as soon as possible and also accelerate the on-boarding of foreign exchange clients on the foreign exchange Relationship Systems to ensure total transparency of the foreign exchange market.”

He said CBN will continuously and vigorously pursue a transparent, liquid, and efficient foreign exchange Market.

He reiterated that CBN’s will not tolerate unscrupulous actions nor hesitate to bring serious sanctions on offenders, be they banks or their staff.

“The Bank therefore encourages market participants to assist in ensuring that these new measures engender the preservation of our external reserves, stability of our financial system, and growth of our economy to the benefit of all Nigerians,” the statement by Okorafor added.