Naira Bounces Back As Banks Offload  Excess Dollars

Following the midnight February 1, 2024 deadline given by the Central Bank of Nigeria to commercial banks to sell all excess foreign exchange holdings, the increase in the level of forex sale activities at the official foreign exchange market, led to the rebound of the naira at the parallel market on Thursday.

GWG.ng gathered that the treasury departments of the Deposit Money Banks spent the entire day battling to sell their excess FX holdings. Officials processed several foreign exchange request forms of their customers as they sold more dollars to them.

Several top bank executives, who spoke to The PUNCH on the condition of anonymity confirmed that there were huge forex transactions in the banks.

As of 6pm on Thursday, bank officials, especially those of the treasury departments, were making efforts to meet the new prudential requirements of the regulator.

Following the latest CBN directive which is aimed at unifying the official and parallel market rates of the local unit, several banks sold forex to their customers on Thursday.

The development led to a sharp rebound of the national currency in the official market. Bureau De Change operators in Lagos, Kano, and Abuja also pushed to sell their dollar holding amid fear the local unit might sustain the gain in coming days.

Alhaji Lawan Ismael, a BDC operator in Ikeja, Lagos, said he bought and sold the greenback for N1400/dollar and N1420/dollar, respectively.

Another BDC at the Lagos airport, Sabiu Abdullahi, said the greenback went for between N1400/$ and N1400/$. This, he said, was a huge rebound from over N1500/$ it sold on Wednesday.

Another BDC at the Lagos airport, Sabiu Abdullahi, said the greenback went for between N1400/$ and N1400/$. This, he said, was a huge rebound from over N1500/$ it sold on Wednesday.

In Abuja, the naira traded at the parallel market between N1,300/$ and N1,350/$.

A Bureau De Change operator, Ibrahim Yahu told The PUNCH, “Today, because of our small action, you could not get a standard price. Those who bought today did so at risk. But the dollar sold between N1,300 and N1,350.”

The naira closed at N1,455.59/$ at the official window on Wednesday, according to the FMDQ Securities Exchange. This rate has been yet to be updated as of 09:39 pm Thursday.

Speaking on the effect of the circular, bank officials who pleaded anonymity said they were bound to ensure their books remain within the new FX prudential limit.

All banks working to meet the deadline,” the chief financial officer of a tier-2 bank told The PUNCH on Thursday evening.

Also, a top official of a tier-1 bank, while commenting on the development, said, “After the CBN directive, we had to push out the FX.”

Another official said, “All banks are pushing out funds now, and we are ready to sell. The key thing is profit here.”

Meanwhile, some bank officials said beyond the FX in banks, the CBN and the security agencies would need to beam their searchlights on politicians and government officials who are hoarding dollars in their homes.

Meanwhile, an official at a first-generation bank who pleaded anonymity revealed that the banks did not have enough physical foreign notes to dispose of as directed by the CBN. The source who is not permitted to speak to the media claimed that the surge observed by the apex bank in its Net Open Positions were electronic notes and not physical as insinuated by the circular.

With additional reporting from The Punch

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