Stock Markets Sink, Dollar Jumps On Central Bank Watch

Asian and European stock markets sank and the dollar rallied Thursday after the Federal Reserve warned US interest rates would go higher than previously expected in its fight against decades-high inflation.

The Fed on Wednesday unveiled a fourth straight 0.75-percentage-point increase as expected – the sixth hike this year to cool rampant prices.

The dollar on Thursday rose strongly against main rival including the pound and as the Bank of England was set to deliver its own bumper interest-rate hike in a decision due at 1200 GMT.

READ ALSO: Bank Of England Set For Biggest Rate Hike In 33 Years

The BoE is tipped to lift its key rate by 0.75 percentage points to three percent — the most in 33 years and putting British borrowing costs at the highest level since 2008.

Norway’s central bank raised its policy rate for a fourth consecutive time, with a quarter-point increase that took it to its highest level since 2009 at 2.5 percent.

Oil prices also fell heavily on Thursday as aggressive rate hikes increase expectations of a global recession.

Hong Kong led stock market losses as the city’s central bank hiked rates in line with the Fed, owing to their policy link via the dollar peg.

Traders gave back a chunk of the previous two days’ gains, which came on the back of speculation China was planning to roll back some of its painful zero-Covid policies.

Adding to the selling was confirmation from Beijing’s health authority that it intended to stick to the strategy.

‘Some way to go’

“Stocks fell… after the Federal Reserve raised benchmark interest rates and warned that there was still some ways to go in its efforts to tame inflation,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

Before the Fed announcement, stocks had rallied for more than a week on speculation the US central bank would indicate that its rate tightening could soon reach a peak as the world’s biggest economy showed signs of slowing.

Yet Powell poured cold water on those hopes, telling a news conference that “incoming data since our last meeting suggests that ultimate level of interest rates will be higher than previously expected”.

He added that “we still have some ways” until borrowing costs were at the necessary level and that it “is very premature to be thinking about pausing”.

Investors now expect Fed rates to top out at more than five percent, compared with four percent previously.

Global equities have slumped this year on mounting fears that rising borrowing costs will curtail consumer and business spending and spark a global recession.

“The Federal Reserve… didn’t offer any real crumbs of comfort for traders or indeed the global economy when it came to how rapidly the now relentless — and potentially damaging — run of rate hikes may conclude,” said Scope Markets analyst James Hughes.

Key figures around 1030 GMT

 

London – FTSE 100: DOWN 0.4 percent at 7,113.98 points

Frankfurt – DAX: DOWN 0.8 percent at 13,156.90

Paris – CAC 40: DOWN 0.6 percent at 6,238.31

EURO STOXX 50: DOWN 0.8 percent at 3,593.41

Hong Kong – Hang Seng Index: DOWN 3.1 percent at 15,339.49 (close)

Shanghai – Composite: DOWN 0.2 percent at 2,997.81 (close)

Tokyo – Nikkei 225: Closed for a holiday

New York – Dow: DOWN 1.6 percent at 32,147.76 (close)

Pound/dollar: DOWN at $1.1258 from $1.1390 Wednesday

Euro/dollar: DOWN at $0.9754 from $0.9816

Dollar/yen: UP at 148.16 yen from 147.90 yen

Euro/pound: UP at 86.64 pence from 86.17 pence

Brent North Sea crude: DOWN 1.4 percent at $94.80 per barrel

West Texas Intermediate: DOWN 1.8 percent at $88.40 per barrel

AFP

Gov Sule ‘Shocked’ By Naira’s Fall Against Dollar

A file photo of Nasarawa State Governor, Abdullahi Sule.
A file photo of Nasarawa State Governor, Abdullahi Sule.

 

Governor Abdullahi Sule of Nasarawa State says he is worried about the naira’s fall against the dollar. 

Though concerned over the development, he hopes that the situation will be reversed soonest.

“I am extremely worried,” he said on Wednesday during an interview on Channels Television’s Politics Today, adding that the move to redesign the naira might have further worsened the situation.

“But again, it takes you back really to understand, ‘Does it worry me?’ Of course, it worries me very badly. Because is that making it a little easier on the part of the common man? No. The common man is actually going through the heat during this period.

“In fact, when I saw it yesterday, I was shocked to see the naira going all the way to N818 for a dollar.”

READ ALSO: CBN’s Naira Redesign Plan Purely Political, Has No Basis In Economics – Obaseki

He, however, reiterated that the Central Bank of Nigeria’s (CBN) plan to redesign the naira must have spiked the rush for the dollar and the subsequent fall of the nation’s currency.

The governor’s comment came hours after his Edo State counterpart Godwin Obaseki faulted the CBN’s move, claiming it was politically motivated.

“They say we should all bring our naira and give it to them because they want to change it for us. Is that our priority now? How does changing of currency reduce the price of food in the market? They say they want to change our currency and dollars are going higher every day. We can’t even see dollars again,” the governor said at the inauguration of the Edo State Peoples Democratic Party (PDP) Women Campaign Council in Benin City, the Edo State capital.

“I am an economist and I can tell you categorically that this policy by the CBN and Federal Government has no basis in economics. There is no reason to do this; this is purely political.”

Pound Hits Record Low Versus Dollar, Italy Stocks Up After Vote

(FILES) In this file photo taken on December 14, 2017 British ten pound sterling notes are arranged for a photograph in London on December 14, 2017. The British pound extended losses on March 20, 2019 after Prime Minister Theresa May requested EU leaders to delay Brexit until June 30, sparking greater uncertainty over the nation’s departure from the bloc.
Justin TALLIS / AFP

 

 

The pound hit a record low against the dollar Monday on surging fears about the ailing UK economy.

Stock markets mostly extended losses and oil prices fell further after last week’s routs that were triggered by growing prospects of a global recession.

However, the Italian stock market climbed as markets assessed Italy’s future political landscape after Eurosceptic populists swept to victory in the eurozone member’s general election.

“The pound’s crash is showing markets have a lack of confidence in the UK and that its financial strength is under siege,” said Jessica Amir at Saxo Capital Markets.

“The pound is a whisker away from (dollar) parity and the situation is going to only worsen from here.”

Economists expressed concerns that last week’s huge tax-cutting budget from the government of new Prime Minister Liz Truss — aimed at helping the recession-threatened economy — could actually spark massive borrowing and further fuel inflation.

The pound on Monday struck an all-time low at $1.0350, days after new UK finance minister Kwasi Kwarteng’s inflation-fighting budget.

Sterling has struggled in recent years as the UK fails to strike major trade deals following its exit from the European Union.

Prior to Monday’s crash, the pound suffered a series of 37-year lows against the greenback this month on UK recession fears propelled by sky-high inflation.

The euro has additionally come under heavy selling pressure against the dollar in recent months, as the Federal Reserve hikes interest rates more aggressively than the European Central Bank.

– Italian stocks –

In stock market trading Monday, Milan’s FTSE MIB rose 0.5 percent to 21,174.60 points.

However the euro struck a new 20-year low at $0.9554.

“Italy is clearly outperforming following the election result,” noted Craig Erlam, analyst at Oanda trading group.

“Time will tell how successful the new government will prove to be but the prospect of some political stability appears to be generating a small relief rally today.”

Italy took a sharp turn to the right after Giorgia Meloni’s Eurosceptic populist party swept to victory in a weekend general election, putting a one-time Mussolini admirer on course to become the first woman to lead the country.

Meloni’s Brothers of Italy party, which has neo-fascist roots, won 26 percent in Sunday’s election, according to partial results.

It leads a coalition set to win a majority in parliament.

Elsewhere, the Moscow stock exchange plunged 10 percent to its lowest point since Russia began its Ukraine offensive seven months ago as tensions grew across the country over partial military mobilisation.

The benchmark ruble-denominated Moex index sank 10.2 percent to 1,873.55 points in early afternoon trading, dropping below the 1,900 points mark for the first time since the February invasion of neighbouring Ukraine.

– Key figures at around 1215 GMT –

Pound/dollar: DOWN at $1.0721 from $1.0852 on Friday

Euro/dollar: DOWN at $0.9645 from $0.9695

Euro/pound: UP at 89.93 pence from 89.28 pence

Dollar/yen: UP at 144.30 yen from 143.31 yen

London – FTSE 100: DOWN 0.7 percent at 6,969.77 points

Frankfurt – DAX: DOWN 0.1 percent at 12,273.63

Paris – CAC 40: DOWN 0.1 percent at 5,777.09

EURO STOXX 50: DOWN 0.1 percent at 3,346.93

Tokyo – Nikkei 225: DOWN 2.7 percent at 26,431.55 (close)

Hong Kong – Hang Seng Index: DOWN 0.4 percent at 17,855.14 (close)

Shanghai – Composite: DOWN 1.2 percent at 3,051.23 (close)

New York – Dow: DOWN 1.6 percent at 29,590.41 (close)

West Texas Intermediate: DOWN 1.0 percent at $77.98 per barrel

Brent North Sea crude: DOWN 1.1 percent at $85.17 per barrel

AFP

Pound Sinks 2% Against Dollar

 

 

The British pound tumbled two percent against the dollar Friday, as recession fears intensified following poor data despite UK government efforts to drive growth.

Following Britain’s tax-cutting budget, sterling plunged to $1.1042, the lowest level since 1985, also after survey data showed the UK economy was likely in recession.

Unable To Repatriate $85m, Emirates Set To Reduce Operations In Nigeria

Emirates Airlines
File: The Emirates Airlines plane.

 

 

Emirates Airlines has said it will reduce its flight operations to Nigeria due to its inability to repatriate about $85 million in revenue.

The airline made this known in a letter addressed to the Minister of Aviation, Hadi Sirika.

The letter, dated July 22, was signed by Emirates airline’s divisional senior vice-president (DSVP), international affairs, Sheik Majid Al Mualla.

Emirates said the planned reductions in its operations in Nigeria would take effect from August 15.

It added that flights would be reduced from 11 per week to seven at the Murtala Muhammed International Airport (MMIA).

“We have had no choice but to take this action, to mitigate the continued losses Emirates is experiencing as a result of funds being blocked in Nigeria,” the letter said.

“As of July 2022, Emirates has US$ 85 million of funds awaiting repatriation from Nigeria. This figure has been rising by more than $US 10 million every month, as the ongoing operational costs of our 11 weekly flights to Lagos and 5 to Abuja continue to accumulate.

“We simply cannot continue to operate at the current level in the face of mounting losses, especially in the challenging post-COVID-19 climate.

“Emirates did try to stem the losses by proposing to pay for fuel in Nigeria in Nairas, which would have at least reduced one element of our ongoing costs, however, this request was denied by the supplier.

“This means that not only are Emirates’ revenues accumulating, we also have to send hard currency into Nigeria to sustain our own operation. Meanwhile, our revenues are out of reach, and not even earning credit interest.

“Your Excellency, this is not a decision we have taken lightly. Indeed, we have made every effort to work with the Central Bank of Nigeria (CBN) to find a solution to this issue. Our Senior Vice-President met with the Deputy Governor of the CBN in May and followed up on the meeting by letter to the Governor himself the following month, however no positive response was received.

“Meetings were also held with Emirates’ own bank in Nigeria and in collaboration with IATA to discuss improving FX allocation, but with limited success. Despite our considerable efforts, the situation continues to deteriorate. We are now in the unfortunate position of having to cut flights, to mitigate against further losses going forward.”

“We are confident that your valuable involvement would make a real difference in improving this very difficult situation. Should there be any positive development in the coming days, we will, of course, re-evaluate this decision.”

 

We Are Working To Avert Naira’s Further Fall Against Dollar, CBN Assures Nigerians

File photo

 

The Central Bank of Nigeria (CBN) has advised Nigerians to resist the urge of succumbing to the speculative activities of some players in the foreign exchange market.

It gave the advice in the face of rising demand for foreign exchange for both goods and services by Nigerians.

CBN’s Director of Corporate Communications, Osita Nwanisobi, who briefed reporters on Thursday in Abuja said the apex bank remained committed to resolving the foreign exchange issues confronting the nation and as such has been working to manage both the demand and supply side challenges.

While admitting that there was huge demand pressure for foreign exchange to meet the needs of manufacturers and for the payment of tuition, medical fees and other Invisibles, Nwanisobi said the bank was concerned about the international value of the naira.

He added that the monetary authority was strategising to help Nigeria earn more stable and sustainable inflows of foreign exchange in the face of dwindling inflows from the oil sector.

Specifically, Nwanisobi said the recent initiatives undertaken by the bank such as the RT200 FX Programme and the Naira4Dollar rebate scheme have helped to increase foreign exchange inflow to the country.

According to him, the bank’s records showed that foreign exchange inflow through the RT200 FX Programme in the first and second quarters of 2022 increased significantly to about $600 million as of June 2022.

The CBN spokesman disclosed that the Naira4Dollar incentive also increased the volume of diaspora remittances during the first half of the year.

He said interventions such as the 100 for 100 Policy on Production and Productivity, Anchor Borrowers’ Programme (ABP) and the Non-Oil Export Stimulation Facility (NESF), among others, were also geared toward diversifying the economy, enhancing the inflow of foreign exchange, stimulating production and reducing foreign exchange demand pressure.

Nwanisobi gave an assurance that the bank would continue to make a deliberate effort in the foreign exchange sector to avert a further downward slide in the value of the naira which he observed was fuelled by speculative tendencies.

Reiterating an earlier position of the CBN Governor, Mr Godwin Emefiele, he urged Nigerians to play their role by adjusting their consumption patterns, looking inwards and finding innovative solutions to the country’s challenges.

The CBN spokesman submitted that monetary policy alone could not bear all the burden of the expected adjustments needed to manage the challenges around Nigeria’s foreign exchange.

“It’s our collective duty as Nigerians to shore up the value of the naira,” he said.

The Consequences Of The Euro’s Fall To Dollar Parity

Euro Against Dollar
File photo

 

The euro on Tuesday fell to parity with the dollar for the first time in nearly 20 years. Here are the concrete consequences of the decline in the value of the single European currency.

– On inflation, purchasing power –

Nearly half of all goods imported into the eurozone are invoiced in dollars, compared to less than 40 percent in euros, according to the European statistics authority, Eurostat.

Oil and gas, for example, are traditionally paid for in dollars, and the price of these two commodities has soared in recent months as a result of Russia’s war against Ukraine.

That means more euros are needed to pay for an equivalent amount of goods in dollars.

“Imported goods become less competitive, compete against each other and therefore become more expensive,” which fuels inflation and erodes households’ purchasing power, said Isabelle Mejean, professor at Sciences Po university.

One specific effect of the euro’s fall against the dollar is that it will “dampen European tourism to the United States in particular,” said BNP Paribas economist, William De Vijlder.

READ ALSO: British PM: Kemi Badenoch Of Nigerian Heritage Joins Race, Gets Endorsements 

Because European visitors will need to spend more euros to buy the equivalent amount in dollars, substantially pushing up the overall cost of their trip to the United States, but also to other countries whose currencies are pegged to the dollar, such as Qatar or Jordan.

By contrast, visitors to Europe from the United States, Qatar and Jordan benefit from the exchange rate, as their dollars buy them a lot more in the eurozone than before.

– On businesses –

The effect of the decline in the value of the euro varies, depending on how reliant a business is on foreign trade and energy.

“Companies that export outside the euro area benefit from the euro’s fall because their prices become more competitive” when converted into dollars, said Philippe Mutricy, research director at the public-sector bank Bpifrance.

“By contrast, import-orientated businesses are at a disadvantage.”

In the case of local craftsmen, who are dependent on raw materials and energy, but export little, the weaker euro can lead to a veritable explosion in costs.

The biggest winner from the euro’s falling exchange rate are export-orientated manufacturing sectors such as the aerospace, automobile, luxury goods and chemicals industries.

And major players are “better prepared for shocks” as they can hedge against exchange fluctuations, said Mutricy.

“They purchase foreign currency in advance at advantageous rates to cushion them against sharp swings in the exchange rate.”

– On growth and debt –

The fall in the value of the euro makes prices outside the single currency area more competitive, theoretically providing a boost to the export of European goods and services abroad.

But the positive effect can be mitigated by the rising prices of commodities in the wake of the war in Ukraine, particularly in export-orientated economies such as Germany.

The effect on debt repayment is less clear cut.

The higher the pace of economic growth, the faster a country can repay its debt, said Mejean of Sciences Po Paris. But only on the proviso that the financial markets consider European debt to be sufficiently safe and interest rates remain low.

For countries that issue dollar-denominated debt, the decline in the value of the euro against the dollar pushes up the cost of debt repayment.

– For central banks –

By fuelling inflation, the euro’s fall could push the European Central Bank to raise interest rates more rapidly. It is preparing to tighten borrowing costs for the first time in 11 years in July.

“You can say that the ECB wouldn’t react to the rise in commodity prices, but the challenge of regaining control over inflation increases as the exchange rate pushes up the price of imports,” said De Vijlder.

The Banque de France also said at the end of May that the euro’s weakness could complicate the ECB’s efforts to tame inflation.

AFP

Euro Strikes Dollar Parity As Eurozone Recession Fears Mount

Euro Against Dollar
File photo

 

The euro struck parity with the dollar for the first time in nearly 20 years on Tuesday as a cut in Russian gas supplies to Europe heightened fears of a recession in the eurozone.

The European single currency hit exactly one dollar — its lowest level since December 2002 — before bouncing back to $1.0069.

Oil prices plunged on concerns of a wider recession as central banks hike interest rates to fight decades-high inflation.

European stock markets followed Asian exchanges lower, while Wall Street opened mixed.

“Rising inflation, stalling economic growth and more recently fears that Russia could cut gas supplies have pulled the euro lower,” said Fiona Cincotta at City Index.

“The nail in the coffin today was dire data showing that economic confidence in Germany fell to a decade low,” she added.

Russian energy giant Gazprom on Monday began 10 days of maintenance on its Nord Stream 1 pipeline — with Germany and other European countries watching anxiously to see if the gas comes back on.

“The gas crisis has really spooked markets over the eurozone economy,” Markets.com analyst Neil Wilson told AFP.

With relations between Russia and the West at their lowest in years because of the invasion of Ukraine, Gazprom may not reopen the valves, according to analysts.

“The next few weeks could be challenging for Europe, with possibly maximum uncertainty stretching into August,” said SPI Asset Management’s Stephen Innes.

“Investors increasingly believe that gas may not start to flow through Nord Stream 1 again following the scheduled maintenance on July 11-21, with further ‘temporary’ interruptions seen as likely.”

Worries about a Covid flare-up in China — fuelling fears of more lockdowns — added to the downbeat mood, just as investors prepared for a week of economic data and corporate earnings that could have huge implications for markets.

A forecast-beating US jobs report last week suggested the world’s top economy was coping with higher Federal Reserve rates, but it also gave the central bank more room to continue tightening — leading to concerns it could go too far and cause a contraction.

The European single currency is also under pressure from the Federal Reserve hiking US interest rates more aggressively than the European Central Bank.

The dollar has jumped 14 percent against the euro since the start of the year.

US inflation data due out Wednesday could also solidify the case for the Fed to continue raising interest rates aggressively.

“In anticipation of that, investors have retreated to the safety of the US dollar once more, steering clear of risky assets in favour of haven” assets, said market analyst Craig Erlam at trading platform OANDA.

Central banks have been increasing borrowing costs in a bid to tame inflation, which has been fuelled by soaring energy prices.

Oil and gas prices have rocketed this year after economies reopened from Covid lockdowns and following the invasion of Ukraine by major energy producer Russia.

– Key figures at around 1330 GMT –

Euro/dollar: UP at $1.0043 from $1.0041 Monday

Pound/dollar: DOWN at $1.1874 from $1.1892

Euro/pound: UP at 84.57 pence from 84.38 pence

Dollar/yen: DOWN at 136.65 yen from 137.41 yen

West Texas Intermediate: DOWN 4.8 percent at $99.15 per barrel

Brent North Sea crude: DOWN 4.5 percent at $102.33 per barrel

London – FTSE 100: DOWN 0.3 percent at 7,177.62 points

Frankfurt – DAX: DOWN 0.3 percent at 12,795.84

Paris – CAC 40: DOWN less than 0.1 percent at 5,995.36

EURO STOXX 50: DOWN 0.2 percent at 3,464.48

New York – Dow: DOWN 0.2 percent at 31,098.44

Tokyo – Nikkei 225: DOWN 1.8 percent at 26,336.66 (close)

Hong Kong – Hang Seng Index: DOWN 1.3 percent at 20,844.74 (close)

Shanghai – Composite: DOWN 1.0 percent at 3,281.47 (close).

AFP

Nearly $700m Stolen From Iraq State Banks – Graft Body

CBN Plans $100m Sale At Special Auction
US dollar notes.

 

Nearly $700 million in public funds has been misappropriated from state-run banks in Iraq in a scandal implicating more than 40 people, an anti-corruption commission said Thursday, after a three-year probe.

A total of 926 billion Iraqi dinars ($697 million) went missing due to “forgery, embezzlement, manipulation, money laundering (and) abuse of position”, the Commission for Integrity said in a statement.

The alleged fraud took place at a branch of Maysan province’s agricultural bank, as well as four branches of Rasheed Bank in Maysan and the capital Baghdad, the commission said.

The commission did not specify the timeframe of the offences, but a commission official, who did not want to be named, said investigations into suspected illegal activity began in 2019.

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“Arrest warrants will be issued against 41 people suspected” of wrongdoing over the affair, the official added.

The commission said bank employees and even customers were among those implicated in a scandal that amounts to a “process of organised sabotage against the national economy”.

Corruption plagues all levels of the Iraqi state, but middle managers, rather than top officials, tend to bear the brunt of anti-graft campaigns.

Official figures published last year estimated that well over 400 billion dollars has gone missing from state coffers in the near two decades since dictator Saddam Hussein was toppled in 2003.

The country ranks 157 out of 180 countries in Transparency International’s corruption perceptions index.

Major anti-regime protests in late 2019 were spurred in large part by anger over corruption and the related dilapidation of public services.

AFP

Dollar Breaks 110 Yen For First Time Since March 2020

A currency exchange vendor counts US dollar notes at Tahtakale in Istanbul, on March 22, 2021.  (Photo by Ozan KOSE / AFP)

 

The dollar broke through the 110 yen barrier Tuesday for the first time in a year as optimism about the global economic outlook and rising US bond yields see investors turn away from the safe haven Japanese unit.

The greenback hit 110.18 yen in afternoon trade as investors grow increasingly confident that world growth will pick up pace this year thanks to huge stimulus spending, particularly by the United States, with predictions it could go as high as 115 yen.

With the US government pressing ahead with a massive spending spree to kickstart the world’s top economy, there is a growing expectation that inflation will rocket over the coming months.

That has led to a rise in Treasury yields to one-year highs owing to bets that the Federal Reserve will have to lift interest rates earlier than its estimated 2024 timeline.

READ ALSO: Israel Reopens Egypt Crossing For First Time Since COVID-19 Pandemic

The yen is considered a go-to currency in times of turmoil and uncertainty and the unit strengthened against the dollar over the past 12 months owing to ongoing concern about the impact of the pandemic.

But the rollout of vaccines and passage of Donald Trump’s near-$1 trillion stimulus at the end of last year, followed by Joe Biden’s $1.9 trillion package soon after, have raised expectations for a strong recovery.

The dollar is up almost six percent from its recent low seen at the start of January.

“The dollar-yen trend is backed by the rise in Treasury yields as the market focuses on the extent of the potential US economic recovery,” said Masahiro Ichikawa, at Sumitomo Mitsui DS Asset Management.

“The dollar could rise to as high as 115 yen by the end of the year, depending on the pace of the recovery.”

AFP

Diaspora Remittances: Beneficiaries To Get N5 Incentive For Every USD Received, Says CBN

CBN Plans $100m Sale At Special Auction
A file photo of US dollar notes.

 

The Central Bank of Nigeria (CBN) has introduced the ‘CBN Naira 4 Dollar Scheme’ in its bid to sustain the increase in inflows of diaspora remittances into the country.

CBN announced this in a circular to all deposit money banks, International Money Transfer Operators (IMTOs), and the public in general.

In the document dated March 5, 2021, and signed by its Director of Trade and Exchange Department, A.S. Jibrin, the apex bank explained that the scheme was an incentive for senders and recipients of international money transfers.

Accordingly, it noted that all recipients of diaspora remittances through IMTOs licensed by the nation’s financial regulator would henceforth be paid N5 for every 1$ received as remittance inflow.

The CBN added that the incentive of N5 for every $1 remitted by the sender and collected by the designated beneficiary would be paid through the commercial banks in Nigeria.

According to it, the incentive is to be paid to recipients whether they choose to collect the USD as cash across the counter in a bank or transfer the same into their domiciliary account.

The apex bank stated that it had discussed the new development with banks and IMTOs, saying the scheme would take effect from March 8 and end on May 8, 2021.

CBN To Resume FOREX Sales To BDC’s On Monday

 

The Central Bank of Nigeria has said that it will resume sales of foreign exchange to operators of Bureau de Change (BDCs) from Monday, September 7, 2020.

According to a statement from the apex bank on Wednesday, the decision to inject liquidity into the FOREX market is crucial to boosting the naira against the dollar.

It added that the sale will be gradual and done twice a week while stressing that the interventions made in the Investors and Exporters (I&E) window will plunge market speculators into losses following their failure to heed to warning signs from the CBN.

Speaking on the issue, the Director, Corporate Communications Department at the CBN, Isaac Okorafor, said the sale will be done “twice a week – Mondays and Wednesdays, hence the BDCs had been directed to ensure that their accounts with their banks are adequately funded to ensure seamless transactions.”

While warning speculators to desist from what he termed unpatriotic tendencies, Okorafor urged registered BDCs to comply with the CBN guidelines as the Bank would not hesitate in sanctioning any erring dealer.

READ ALSO: China Is Nigeria’s Highest Import Partner, Total Trade At N6.2bn In Q2 – NBS

He also assured that those requiring foreign exchange for purposes of travel, educational fees, and other Invisibles could obtain such over the counter from their respective banks.

The naira began to rebound against the dollar, exchanging for N420 to a dollar in the BDC segment of the market on Wednesday, after trading for as high as N480 to the dollar on Monday in the I&E window, prompting fears that the Naira was in a free fall.

Meanwhile, the President of the Association of Bureau de Change Operators of Nigeria (ABCON), Aminu Gwadabe has expressed support for the CBN action, noting that the anticipated intervention in the BDC sector would ensure stability in the foreign exchange market.

According to him, speculators in the forex market have been dealt a huge blow with the sharp drop in the exchange rate, which he said would continue a downward trend with the resumption of international flights in and out of the country.

The apex bank had in March this year, suspended the sales of foreign currency to Bureau De Change operators (BDCs) in the country, for two weeks, following a request by the BDC for the CBN to grant them a two-week holiday as a measure to control the spread of the Coronavirus outbreak.

Recently, the Federal Government announced that it will open its airspace for international flights to resume on September 5, 2020.