Naira Falls to New Low in Official Market Amid CBN’s New FX Rules to BDCs
- The Nigerian currency, the naira, depreciated by over N100 against the US dollar on Tuesday, September 17, 2024
- The development comes amid a decline in August headline inflation by 1.5% to 32.15%
- The naira, however, gained N5 in the official market, trading at N1,660 from the N1,665 per dollar it traded the day before
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The Nigerian currency, the naira, lost more than N100 against the US dollar in the official market amid slowing inflation in the country, marking the second-month inflation will ease.
Information from the Nigerian Autonomous Foreign Exchange Market (NAFEM) shows that the naira sold at N1,656 per dollar on Tuesday, September 17, 2024, higher than the N1,546 it traded on Monday, September 16, 2024.
Source: Getty Images
Naira gains in the black market
FMDQ Exchange data shows that the currency dealers quoted the naira at a high of N1,665 and a low of N1,565 per dollar.
The foreign exchange market's turnover declined to $100.39 million on Tuesday, September 17, 2024.
In the parallel segment of the foreign exchange market, the naira rose to trade at N1,660 per dollar, up from the previous rate of N1,665.
The development comes as the National Bureau of Statistics (NBS) disclosed that Nigeria’s headline inflation dipped by 1.25% to 32.15%, down from 33.40% in July.
Food inflation declined, reaching 37.52% compared to 39.53% in July 2024.
CBN issues new rules to BDCs
The Central Bank of Nigeria (CBN) issued a new policy guideline, restricting the Bureau de Change (BDC) operators’ single exchange cash sales to $5,000.
The apex bank said the policy in the Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for 2024/2025 aims to regulate cash sales in the FX market to ensure stability and compliance.
BDCs compete with similar businesses and profit by buying foreign exchange and then selling the same currency at a higher FX rate.
Punch reports that CBN said BDC operators should continue to observe a maximum FX cash sales limit of $5,000 per transaction.
Analyst disagrees with CBN
Economist and senior banker Janet Ogochukwu of one of the tier-1 banks disclosed that the measure may prove counterproductive, considering the volatile FX rate.
She said the only way the naira can stabilise is if there is enough liquidity in the system.
“The system is volatile now, and the naira has yet to find its bearing among major currencies.
“The CBN should pump enough FX into the system to prop up the naira’s value until the currency can easily float without constant interventions.”
Read also
New exchange rate as naira reverses gain, crashes by over N90 against US dollar in 24 hours
Naira appreciates massively against US dollar
Legit.ng earlier reported that the Nigerian currency, the naira, appreciated in the official FX market against the United States dollar in the official market.
According to data from FMDQ Securities, the naira closed at N1,558.75/$1 at the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, September 13, 2024.
This represents an N91 appreciation compared to the N1,649.76/$1 previous day's exchange rate.
Proofreading by James, Ojo Adakole, journalist and copy editor at Legit.ng.
PAY ATTENTION: Сheck out news that is picked exactly for YOU ➡️ find the “Recommended for you” block on the home page and enjoy!
Source: Legit.ng
