The Naira Wednesday depreciated further to N270
per dollar at the parallel market, following reduction
of dollar sales to bureaux de change (BDCs) by the
Central Bank of Nigeria (CBN).

It was learnt that from ?260 per dollar at the close of
business on Tuesday, the parallel market exchange
rate rose sharply to ?270 per dollar in Lagos,
indicating ?10 depreciation.

But in Abuja, the parallel market exchange rate rose
from ?262 per dollar to close at ?273 per dollar,
indicating N11 depreciation.

BDC operators, who confirmed this development to
newsmen, said that the sharp depreciation was due
to further reduction in the weekly dollar sales by the
CBN.

President, Association of Bureaux De Change
Operators of Nigeria (ABCON), Alhaji Aminu
Gwadabe stated that though the CBN increase the
number of BDCs it sold dollars to from 1,170 last
week to 2,270 this week, it however reduced the
amount of dollars sold to each BDC by 60 percent
from $30,000 to $10,000.

According to Mr. Harrison Owoh, Chief Executive
Officer, H.J Trust BDC, the decision of the CBN
aggravated the demand situation in the market.

“There is huge volume of unsatisfied demand in the
market. We had to turn down lots of request for
dollars because of there is no dollars to sell to them”, he said.

Commenting on this development, Director,
Corporate Communications, Central Bank of Nigeria
(CBN), Ibrahim Mu’azu said that the reduction in
dollar sales to BDCs is part of the demand
management of the CBN in the foreign exchange
market. He said that the depreciation of the naira to
N270 per dollar is a speculative reaction to the
development.

“The rate is not sustainable”, he said. “This is because there are still other windows for end users to buy dollars at lower rate. They can buy dollars at the official rate from the deposit money banks, and from Travelex inside the airport. So by the time people know about these alternatives, the reaction in the parallel market, and the exchange rate will calm down.”

Further investigations reveal that the Naira also
depreciated heavily against the British Pounds.
From ?365 per Pounds at the close of business last
week, the parallel market exchange rate rose sharply to ?385 per Pounds at the close of business
yesterday.

In addition to the reduction in dollar sales by CBN,
foreign exchange supply from autonomous sources
is thinning due to hording. “People are hording their
dollars in anticipation of further depreciation of the
Naira, while some are demanding higher exchange
rate before they sell,” said the Abuja based BDC
operator.

The anticipation of further depreciation is been
driven by speculations that the reduction in dollar
sales by the CBN might be followed by outright
cancellation of the weekly dollar sales programme
which was introduced in 2006. “The naira will hit
N300 per dollar, if the CBN cancels the weekly dollar
sales, projected the Abuja BDC operator.”

Recall that last week the CBN introduced revised
guidelines for BDCs which tightened regulation of
BDC operations. Among other things the apex bank
banned BDCs from having branch directing them to
close all their branches within 90 days. The new
guidelines also banned BDCs from having business
relationship with street currency hawkers, saying it
would revoke the operating license of any BDC with
business relationship with street currency hawkers.

Nigerianeye