Naira responses to CBN’s forex policy, loses N2.60 against dollar

Following the Central Bank of Nigeria’s (CBN) barring of importers of 38 items, including those who want to purchase Eurobonds, foreign currency bonds and shares from participating in the interbank forex market last week, the naira yesterday lost N2.60, trading N226 against the dollar at the parallel market.

Before the latest policy from the CBN, the country’s currency was N220/$1 and banks have been struggling to demand the forex demand of their customers due to the acute scarcity of dollar.

The naira exchanged N198.90/$1 at the interbank market, despite the apex bank pegging exchange rate at N196.90/$1.

The President, Association of Bureau de Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, told Hallmark that the loss N2.60 suffered by the naira is in response to the latest CBN policy on forex, which has put a lot of pressure on the street market, which is meant to fill the vacuum created by barring of the importers from exploring the official market.

Those banned from participating in the official market is a very big forex market.

They need to find a way of meeting their forex needs. This is what is pushing price up,” he opined.

Gwadabe added that the CBN had threatened to revoke the license of any registered forex dealer that sells forex to importers of the listed items.

It would be recalled that the apex bank last Wednesday in a circular excluded importers of 41 items from participating in the country’s interbank currency market.

In the circular signed by its Director, Trade and Exchange, Olakanmi Gbadamosi, the CBN listed 40 items that are not valid for forex in the interbank market, they include: rice, cement, private jets, a wide range of other construction materials, plastic and rubber products, cosmetics etc.

The CBN has taken different measures aimed at strengthening the country’s currency that has shed over 8 per cent of its value this year alone.

The regulator had earlier this week met with banks chiefs to fashion out ways of further strengthening the forex market, although the out of the meeting was not made public.

It would be recalled that the apex had in February closed the Retail Dutch Auction System (rDAS) and Wholesale Dutch Auction System (wDAS) and directed all that are need of forex route their demands through the interbank market.

Meanwhile, the country’s sovereign bond yields yesterday rose more than 10 basis point along the curve