CBN Takes Fresh Steps To Save The Naira

Yemisi Izuora

CBN

The Central Bank of Nigeria (CBN) has announced increase in the weekly supply of dollars to bureau de change (BDC) operators from $15,000 per BDC, to $30,000 per BDC.

The decision according to the bank aims at soothing the strong volatility observed in the forex market in the past few weeks as well as save the naira from further depreciation.

The apex bank further explained that shift was also part of measures to deepen the BDCs segment. The latest policy takes effect from the Wednesday, January 28th, 2015 auction, it said.

While the CBN would sell the greenback to BDCs weekly at the prevailing interbank rate, it warned the forex dealers not to sell to the public at more that 3.5 per cent of its selling rate.

It explained: “This is to inform Bureau De Change (BDC) operators and the general public that as part of the ongoing review of developments in the foreign exchange market and in order to deepen the BDCs segment, the weekly forex cash sales to BDCs have been reviewed upward from $15,000 to $30,000 per BDC, with effect from Wednesday, January 28th, 2015 auction.

“While the CBN will sell to BDCs weekly at the prevailing interbank rate, the BDCs are expected to sell to the public at not more that 3.5 per cent above the CBN selling rate. Consequently, all BDCs are to ensure that the designated accounts in the CBN are duly funded with the equivalent naira proceeds not later than 48 hours before the bidding date.

“Operators are hereby advised to ensure strict compliance with the provisions of the extant regulations on the disbursement of forex cash to their respective customers, as any case of infraction will be appropriately sanctioned.”
CBN Governor, Mr. Godwin Emefiele last week explained that the CBN was “doing everything possible” to ensure that the country remained on the JP Morgan Index in order to avoid the adverse consequences which the country’s exclusion could cause.

JP Morgan analysts had placed Nigeria on a negative watch for the next three to five months following reservations over the country’s foreign exchange position and the bond market which was described as illiquid.

He said the CBN would engage JP Morgan analysts to provide proof of the market’s liquidity. “I am very optimistic that they would see reasons with us,” .

The Central Bank, at the end of its Monetary Policy Committee (MPC) meeting had resolved to maintain the current monetary policy stance, leaving the Monetary Policy Rate (MPR), otherwise known as interest rate, unchanged at 13 percent.
It also retained the cash reserve ratio (CRR) on private sector deposits at 20 percent while CRR on public sector deposits was also left unchanged at 75 percent and Liquidity ratio (LR) was also retained at 30 percent.

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