“N1,117/$”: Currency Dealers Suffer Massive Losses as CBN Pegs The Dollar at New Rates
- Currency dealers have expressed fear that they might run into further losses as the naira continues to gain
- The dealers said that continued appreciation of the naira and the recent directive by CBN to sell the dollar at N1,117 would lead them to losses
- This came as the naira appreciated in the official and parallel markets at N1,230 and N1,200, respectively
PAY ATTENTION: The 2024 Business Leaders Awards Present Entrepreneurs that Change Nigeria for the Better. Check out their Stories!
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
Currency dealers have lamented increasing losses and declined demand for the dollar as the naira appreciated in the official and parallel markets following The Central Bank of Nigeria (CBN) reduction of the exchange rates for Bureau de Change (BDC) operators by 12% at N152.23.
The development followed a ban by the CBN on using foreign currencies as collateral for naira loans.
Source: Getty Images
CBN issues directives to banks on naira loans
The apex bank, however, exempted Eurobonds issued by the Nigerian government from the ban, including Guarantees or foreign banks and Standby Letters of Credit.
PAY ATTENTION: Сheck out news that is picked exactly for YOU ➡️ find the “Recommended for you” block on the home page and enjoy!
The bank disclosed this in a circular signed by Adetona Adedeji, stating the CBN has seen the prevailing situation where customers use foreign currency as collateral for naira loans.
CBN said:
“Consequently, the current practice of using foreign currency-denominated collaterals for Naira loans is hereby prohibited, except where the foreign currency collateral is: Eurobonds issued by the Federal Government of Nigeria or Guarantees of foreign banks, including Standby Letters of Credit.”
The Naira's appreciation puts dealers in a tight spot
According to data from the Nigeria Autonomous Foreign Exchange Market (NAFEM), the Nigerian currency appreciated on Monday, April 8, 2024, to trade at N1,230 per dollar, up from N1,251.05 recorded on Friday, April 5, 2024.
The naira also appreciated in the parallel segment of the foreign exchange market on Monday, April 8, 2024, trading at N1,200 as against the N1,245 per dollar traded on Friday, April 5, 2024.
Analysts believe that the development follows the announcement by the CBN to sell $10.000 to BDCs at N1,101 per dollar for eligible transactions.
The financial institutions regulator directed the operators to sell to end-users at about N1,117 per dollar.
Vanguard reports that the move by CBN sparked panic among currency dealers who feared losses as they may find it hard to offload their dollar holdings.
The naira has been on an upward swing since the CBN introduced a series of policies to check the local currency's fall.
Dollar inflow to FX market surges to highest in 3 years
Legit.ng previously reported that Foreign exchange inflow into the Nigerian Autonomous Foreign Exchange Market (NAFEM) rose in March 2024, reaching the highest monthly level over three years.
The total forex inflow recorded for the month under review stood at $3.75 billion.
According to Data from FMDQ, March inflow recorded a 41.7% improvement over the $2.64 billion recorded in February 2024, with local sources accounting for 59% of the total transactions and foreign sources contributing 41% of gross transactions.
PAY ATTENTION: Donate to Legit Charity on Patreon. Your support matters!
Source: Legit.ng
