Nairametrics| The President of the Association of Bureau De Change Operators of Nigeria, Aminu Gwadabe, has said that the Naira is likely to strengthen on the parallel market this week. His optimism is as a result of the modifications the Central Bank of Nigeria (CBN) made last week to the disbursement of forex non commercial banks.
He specifically noted that the review of volumes upward of the proceeds of International Money Transfer Services Operators (IMTSO) and removal of disparity in applicable exchange rates by the apex bank in the bureau de change subsectors would ensure that liquidity is maintained in the parallel market and prevent the weakening of the Naira there.
Following the beginning of the CBN’s injection of liquidity into the interbank market for banks the naira rebounds to an all low of N360/$ from N520/$. However, surprisingly, the scenario could not last more than two weeks despite the continued injection of liquidity into the banking system, as the rates began to somersault to a new high of N420/$”, Daily Trust quotes Gwadabe as saying.
It is believed that the increase in the exchange rate at the parallel market despite the evident dollar glut at the banks was as a result of the one-sided nature of the CBN’s interventions. As such, Nigerians with dollar needs not covered by the CBN were forced to use the parallel market and BDCs, where liquidity is short. Thus, it is believed that the 400% increase in dollar allocation to BDCs will result in increased liquidity in the market and hence strengthening of the Naira.