Naira Sells For 470 As Dollar Scarcity Continues

October 31, 2016, 9:45 pm

The naira closed flat at 470 against the United States dollar on Monday, the same level it recorded on Friday.

The naira had plunged to 470 on Wednesday, down from 455 on Tuesday as fresh dollar shortage hit the official and parallel forex markets.

The local currency, which had been relatively stable against the greenback, fell last week as fresh scarcity hit the forex markets.

Travelex and First Bank of Nigeria Limited  had commenced sale of foreign exchange to Bureau De Change operators some weeks ago following the approval by the Central Bank of Nigeria.

Forex traders, however, said last week that the scheme had failed to ease the biting dollar shortage in the country.

“What we get from Travelex is not sufficient,” one trader told Reuters, referring to demand in the market.

At the official market, the naira closed at 305.50 per dollar, a level it had closed for more than two months, supported by the CBN interventions.

The President, Association of Bureau De Change Operators, Alhaji Aminu Gwadabe, told our correspondent on Monday that the sale of dollars to the BDC operators had yet to get across the country.

This, he said, was partly responsible for the fresh dollar scarcity.

“There are still logistics problems in selling forex to all the BDC operators. This is what is causing this relative scarcity,” he said.

Earlier, the CBN asked the International Money Transfer Operators to sell dollars directly to the BDC operators to boost liquidity and narrow the gulf between the parallel market and the official market rates.

Travelex sells around $15,000 to 1,000 retail currency outlets weekly, but the amount is a fraction of what is required to cover demand from individuals and small businesses.

Dollar shortages have caused many companies to halt operations and lay off workers, compounding an economic crisis exacerbated by the fall in global prices of oil, which accounts for 70 per cent of Nigeria’s budget revenue.

The CBN has struggled to support the naira as the nation’s external reserves continue to fall.

Traders said the naira had been testing new lows as they tried to find thresholds where liquidity could begin to return.

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