Naira slides to 410/$ at BDCs, traders pledge support to CBN

Naira yesterday slipped further to 410 against the United States Dollar due to apprehension in the market over the supply constraints.
The local currency has weakened on both the official and black markets.
This is coming as the directors of Bureau De Change (BDCs) have pledged to corporate with the Central Bank of Nigeria (CBN) to help narrow the exchange rate differentials between the official rate and the parallel market rate
The National president of ABCON  Aminu Gwadabe made the pledge at the emergency meeting of the Association following last week sudden depreciation of the Naira. “We felt that it is necessary to reverse the trend.”
The Naira closed last Friday at about N395/$ in the parallel market, after stabilizing at N380/$ the previous week. It even touched N405 to dollar before it returned to N395 after the BDCs began to sell part of the $20,000 from the CBN.
The CBN has continued to intervene in the market. The Central Bank of Nigeria’s (CBN’s) statement released at the weekend showed that it sold $768 million to airlines, agriculture, petrol and raw material/machineries importers, among others at marginal rate of N310/$.
Details of the transactions showed that the retail and Secondary Market Intervention Sales (SMIS) got $418 million while $350 million went to wholesale auction, Business Travel/Personal Travel Allowances, and school fees. The BDCs bought at N360/$ while short-tenured Forwards of 7-30-day maturity will be sold this week to meet demand of manufacturers and all other forex users.
While cautioning its members against round tripping, Gwadabe said: “ we must understand round tripping has implication for Interest rate. once the exchange rate goes up, interest rate will go up and inflation will follow and nobody is gaining.
Since the CBN resumed selling dollars to BDCs, the market has gained more liquidity and naira strengthened to a large extent. The foreign exchange speculators have suffered major losses because of the role of genuine BDCs in helping the CBN to put them under sever check.” The CBN last week sold a total of $20,000 to each BDC.