Forex losses hit currency dealers as CBN slashes BDC rate to N1,117.5/$
Currency dealers yesterday lamented mounting losses and declining dollar demand as the naira appreciated further in the official and parallel markets, following a 12 per cent or N152.23 reduction in bureaux de change, BDC, exchange rate to N1,117.5 per dollar by the Central Bank of Nigeria, CBN.
Ban on foreign denominated collaterals
Meanwhile, the CBN has banned the use foreign denominated collaterals for naira loans.
It, however, exempted from the ban Eurobonds issued by the Federal Government of Nigeria or Guarantees of foreign banks, including Standby Letters of Credit.
Announcing the ban in a circular, titled “The Use of Foreign-Currency Denominated Collaterals for Naira Loans”, Director, Banking Supervision Department, CBN, Dr. Adetona Adedeji, said: “The Central Bank of Nigeria has observed the prevailing situation where bank customers use Foreign Currency (FCY) as collaterals for Naira loans.
“Consequently, the current practice of using foreign currency-denominated collaterals for Naira loans is hereby prohibited, except, where the foreign currency collateral is: Eurobonds issued by the Federal Government of Nigeria; or Guarantees of foreign banks, including Standby Letters of Credit.
Data from FMDQ showed that the naira appreciated by N20.44 to N1,230.61 per dollar in the official market (Nigeria Foreign Exchange Market, NAFEM) yesterday from N1,251.05 per dollar Friday last week.
Similarly, the Naira appreciated in the parallel market by N45 to N1,200 per dollar yesterday from N1,245 per dollar last Friday.
This follows announcement by the CBN that it will this week sell another $10,000 to 1,588 BDCs at N1,101 per dollar, for eligible invisible transactions.
The CBN directed that BDCs should sell to eligible end-users at spread of not more than 1.5 per cent.
This means BDCs will sell to end users at maximum of exchange rate of N1,117.5 per dollar.