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Bureau De Change (BDC) operators say they are not getting dollars from the commercial banks as directed by the Central Bank of Nigeria (CBN), noting that the situation threatens naira stability.
Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria (ABCON), said BDCs are grappling with limited availability of forex, unfavorable offer rates, fewer participating banks, lower margins, and business uncertainties.
He noted that these factors have combined to fuel currency substitution and speculative activities, leading to the weakening of the naira.
The naira recorded a sharp decline in its value, quoting at 1,580/$ on Thursday and Friday, losing 3.5 percent or N55 compared to 1,525/$ on Wednesday in the parallel market, popularly called the black market.
At the official foreign exchange (FX) market, the naira depreciated by 43/$ on Friday as the dollar was quoted at 1,542/$ compared to 1,499/$ on Monday.
Data from FMDQ Securities Exchange Limited revealed that the naira depreciated as the dollar was quoted at N1,512.30 as against the previous close of N1,500.80 at the NFEM.
Nigerian treasury bill yields have declined sharply, following a surge in market liquidity as well as the decline in inflation rates.
Ayodeji Ebo, an investment professional and managing director/CBO at Optimus by Afrinvest, said a decline in yield will lead to a reduction in Foreign Portfolio Investment (FPI) inflows, thereby decreasing foreign exchange (FX) inflows into the country.
“Additionally, with expectations of lower interest rates, investors are rushing to lock in current attractive rates, reducing the available liquidity for speculative activities or investments in dollar-denominated assets. This, in turn, limits demand for foreign currency and may impact exchange rate dynamics,” he said.
Responding to why the naira is falling to a new low, Ayokunle Olubunmi, head of financial institutions ratings at Agusto & Co., said there are different factors but the gradual decline in yields is one of them.
source: businessday.ng
