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Stakeholders Urge CBN to Liberalise Forex Market

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Forex Weekly Outlook November 7-11
  • Stakeholders Urge CBN to Liberalise Forex Market

Stakeholders in the financial services industry have urged the Central Bank of Nigeria (CBN) to liberalise the foreign exchange (forex) market and allow the naira to float freely.

This is coming amid concerns that CBN’s decision to stop banks from selling dollars to bureaux de change (BDCs) and the clampdown on BDCs for selling dollar above N400 may worsen the exchange rate at the parallel market.

Though the naira has weakened by 36 per cent since June to around N310 per dollar in the official market, investors believe the exchange rate is still being controlled by CBN.

This has led the FMDQ Over-the-Counter (OTC) exchange to announce the suspension of the FMDQ interbank spot rate, replacing it with the CBN spot rate until the general market structure becomes more credible and transparent.

The naira has fallen to N460 from N335 on the black market in that period as businesses struggle to access foreign exchange from their banks. The depreciation occurred despite continuous intervention by the CBN almost on weekly basis, in the market.

FMDQ Over-the-Counter Securities Exchange Chief Executive Officer, Bola Onadele, accused the CBN of using “strong moral suasion” to prevent the naira from depreciating to a market-related level, and called on the regulator to let the currency float freely.

“The average daily turnover in the spot market used to be $1 billion and now it’s less than $100 million. I don’t believe the parallel market is illegal any more. We have inadvertently legitimised it through some of our actions. It may no longer be as small a market as we used to think. If you have $1,000 to convert to naira, will you sell it at 315? No rational person will do that. You’ll sell to a bureau de change and get N460,” Onadele, a former chief dealer at Citigroup Inc’s Nigerian unit, told Bloomberg.

“No one believes the N305 price of the naira on their screens,” Onadele said, “That devaluation risk is still there. It would only melt away when the market establishes a credible price formation on the back of transparent trading operations by the banks. We need to have proper price discovery.”

Afrinvest West Africa Managing Director, Ike Chioke, said his expectations of further fragmentation of the forex market and a liquidity constraint at the parallel market materialised last week as black market operators refused to sell dollars at the regulatory mandated rate of N400/$1 but willing to buy at N395/$1.00, most likely to hoard.

However, he said the naira/dollar rate at the underground parallel market for operators willing to defy regulatory directives on rate traded between N455/$1 and N465/$1 without liquidity constraints.

Chioke said dollar scarcity at the official market was reaffirmed by drop in daily forex turnover to about $1 billion, while approximately $100 million was recorded as unmet demands.

“Accordingly, investor sentiment remained depressed by currency risk as liquidity crunch lingers. Performance at the parallel market however improved as the naira firmed against the dollar on all trading days of the week amidst reports of dollar sales to Bureau De Change operators by Travelex. Parallel market rates closed at N460 to dollar,” he said.

Meanwhile, security agents have continued to raid the offices of black market currency dealers, detaining some dealers and ordering others to sell dollars at a lower rate in a bid to break the fall of the currency, dealers said.

“The police and state security service officials are raiding black marketers in Lagos and Abuja to compel an appreciation of the naira,” Mallam Adamu, a bureau de change operator, said.

Another trader said security agents visiting BDCs told dealers not to sell dollars for more than N395 but that only created more anxiety in the market, with fears that the practice may worsen exchange rate worries.

“We’ve stopped buying dollars from just anybody that walks into our shop due to the harassment from security agents and a directive from our association,” said a dealer, who asked not to be named.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Naira

Black Market Dollar (USD) to Naira (NGN) Exchange Rate Today 27th May 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 27th, 2024 stood at 1 USD to ₦1,520.

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New Naira notes

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 27th, 2024 stood at 1 USD to ₦1,520.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,490 and sold it at ₦1,480 on Friday, May 24th, 2024.

This indicates a decline in the Naira exchange rate when compared to today’s rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in the black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

  • Buying Rate: ₦1,520
  • Selling Rate: ₦1,510

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

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Forex

CBN Revamps Regulatory Guidelines for Bureau De Change Operators

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Bureau De Change Operator

The Central Bank of Nigeria (CBN) has initiated a comprehensive overhaul of regulatory guidelines governing Bureau De Change (BDC) operators.

Following extensive consultations with stakeholders, the CBN has introduced a series of pivotal changes aimed at enhancing the efficiency and transparency of BDC operations across the country.

Key among the reforms is the removal of the mandatory caution deposit previously set at N200 million for tier-1 BDC license holders, as well as the waiver of the N50 million deposit requirement for tier-2 license holders.

This move is expected to alleviate the financial burden on BDCs and enable them to allocate resources more effectively.

Furthermore, the non-refundable annual license renewal fee, which previously amounted to N5 million for tier-1 BDCs and N1 million for tier-2 BDCs, has been withdrawn.

This adjustment seeks to streamline the regulatory framework and eliminate unnecessary financial obligations for BDC operators.

Haruna Mustafa, Director of the Financial Policy and Regulation Department at the CBN, emphasized the importance of these changes in optimizing BDC operations and fostering financial inclusivity.

Mustafa underscored the need for existing BDCs to reapply for licenses based on their preferred tier or license category, as outlined in the revised guidelines.

Also, new license applicants must adhere to the specified conditions for their chosen BDC category.

Existing BDCs are required to meet the minimum capital requirements for their selected license category within six months from the effective date of the guidelines, ensuring a smooth transition to the new regulatory framework.

In alignment with market needs and regulatory standards, the guidelines have also been updated to revise permissible activities for BDCs.

These revisions aim to enhance market efficiency and ensure compliance with corporate governance requirements, as well as anti-money laundering, counter-terrorism financing, and counter-proliferation financing provisions.

The CBN has announced that the receipt and processing of license applications will commence from the effective date of the guideline.

Interested applicants are directed to submit the necessary information electronically to bdclicense@cbn.gov.ng, including the name of the promoter, name of the proposed BDC, email address, and phone number of the promoter.

These comprehensive guidelines replace the previous operational guidelines issued in November 2015 and underscore the CBN’s commitment to fostering a robust and transparent forex market.

The Regulatory and Supervisory Guidelines for BDC Operations are scheduled to take effect from June 3, 2024, signaling a new era for BDC operators in Nigeria.

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Naira

Black Market Dollar (USD) to Naira (NGN) Exchange Rate Today 23rd May 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 23rd, 2024 stood at 1 USD to ₦1,500.

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naira

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 23rd, 2024 stood at 1 USD to ₦1,500.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,470 and sold it at ₦1,460 on Wednesday, May 22nd, 2024.

This indicates a decline in the Naira exchange rate when compared to today’s rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in the black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

  • Buying Rate: ₦1,500
  • Selling Rate: ₦1,490

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

Continue Reading
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