Uncertainty Over Resumption Of Dollar Sales To BDCs
The Naira, last week, continued its downward slide in the parallel market, where it depreciated further to N477 per dollar amidst uncertainty over resumption of dollar sales to Bureau de Change (BDC) operators ahead of the scheduled resumption of international flights this Saturday.
Financial Vanguard market intelligence show that the Naira depreciated by N4 last week in the parallel market as the exchange rate for the market jumped to N477per dollar from N473 per dollar the previous week due to increased demand for dollars as intending travelers besiege the market to source for the dollar in preparation for the resumption of international flights.
“The scheduled commencement of international flights as from August 29 has triggered a surge in speculative demand for dollars in the parallel market. Traders, students and medical tourists are all revving up for a September rush. This is a side effect of the forex rationing by the CBN,” said analysts at Financial Derivatives Company.
The increased dollar demand, according to analysts at Afrinvest Securities Limited, will persist this week. “We expect increased pressure at the parallel market ahead of international travel’’, they said in the company’s weekly market review.
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In addition to the increased dollar demand, the parallel market was hit by acute scarcity of dollars prompted by the suspension of dollar sales to BDCs by the CBN since March.
Prior to March 26th 2020, each BDC operator can purchase up to $50,000 per week. This provided ample dollar supply to meet retail dollar needs for Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) as well as payment for school fees, medical bills and mortgages.
Though the CBN, last week, indicated it would commence dollar sales to BDCs once international flights resume, Financial Vanguard investigations, however, showed that as at the close of business on Friday, BDCs had not received any notification from the apex bank on the modalities for the resumption and the necessary documentation procedure that will signal conduct of dollar sales this week.
A BDC operator who spoke to Financial Vanguard on condition of anonymity said: “We have not seen anything or received communication that indicates the CBN will sell dollars this week. Meanwhile, we have been receiving enquiries from intending travellers for PTA and BTA, but we told them nothing yet from the CBN. Do they want to wait till when the travelers get to their destination before selling dollars to them.’’
A top CBN official who also spoke on condition of anonymity said: “I cannot confirm if we are resuming dollar sales to BDCs. We still have a whole week before Saturday 29th, August and anything can happen before then”.