Forex: Speculators Set to Count Losses as Naira Firms up against U.S. Dollar

*Isaac Okorafor, CBN's director of corporate communications
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ABUJA –  Speculators in Nigeria’s foreign exchange market are set to count huge losses as the Naira continues to surge against the dollar, following the interventions made by the Central Bank of Nigeria (CBN) in the Investors and Exporters (I&E) window.

Prior to CBN’s renewed intervention in the I&E window on Monday, August 31, 2020, the Naira exchanged for as high as N480 to the dollar, prompting fears that the Naira was in a free fall.

However, the naira began to rebound against the dollar following an announcement by the CBN that it would also resume the sale of foreign exchange to operators of Bureau de Change (BDCs) from Monday, September 7, 2020.

Compared to the previous days’ sales, the naira exchanged for N420 to a dollar in the BDC segment of the market on Wednesday, September 2, 2020, plunging speculators into losses, following their failure to heed warning signs from the CBN.

Speaking on the issue, the Director, Corporate Communications Department at the CBN, Isaac Okorafor reiterated that the Bank had concluded plans to inject liquidity into the foreign exchange market by selling forex to licensed BDC operators.

According to him, the sale to BDC would be gradual and be done twice a week – Mondays and Wednesdays, hence the BDCs had been directed to ensure that their accounts with their banks are adequately funded to ensure seamless transactions.

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While warning speculators to desist from what he termed unpatriotic tendencies, Okorafor urged registered BDCs to comply with the CBN guidelines as the Bank would not hesitate in sanctioning any erring dealer. He also assured that those requiring foreign exchange for purposes of travel, educational fees and other invisibles could obtain such over the counter from their respective banks.

Meanwhile, the President of the Association of Bureau de Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe has expressed support for the CBN action, noting that the anticipated intervention in the BDC sector would ensure stability in the foreign exchange market.

According to him, speculators in the forex market have been dealt a huge blow with the sharp drop in the exchange rate, which he said would continue a downward trend with the resumption of international flights in and out of the country.

It will be recalled that the CBN, in a circular signed by its Director, Trade and Exchange Department, Dr. Ozoemena Nnaji, on Thursday, August 27, 2020, had disclosed plans by the CBN to resume the sale of foreign exchange to BDCs as part of effort to enhance accessibility to foreign exchange.

 

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