Fear Grips BDCs Over NNPC’s $3bn FX Intervention As Dollar Set To Crash Below N800

Bureau de change operators in Nigeria are jittery about the potential of the dollar to crash below N800 after the Nigerian National Petroleum Company Ltd sealed a $3bn crude oil deal with African Export-Import Bank to boost foreign exchange liquidity in the market.

The operators are also under pressure from the Central Bank of Nigeria which is threatening them with licence withdrawal, among others.

A day after the NNPCL announced a mega oil deal worth $3bn aimed at crashing the price of the dollar, the naira has gained N30.

The naira closed at N890/USD on Tuesday; N870/USD on Wednesday and traded between N840 and N845 in the unofficial market.

Since the introduction of a managed float in June this year, the naira collapsed and almost traded close to N1000 per dollar.

At the start of the week, the naira traded N955 per dollar until the acting CBN governor threatened to clamp down on speculators on Tuesday after a meeting with President Bola Tinubu.

Mohammed a BDC trader at Zone 4 in Abuja told THE WHISTLER that, “The threat from the CBN is still affecting the market. We also learnt the NNPCL has secured $3bn to intervene in the Forex market. The truth is that we can’t even predict what will happen in the next minute.

“The executives of ABCON met with the CBN today and they will give us feedback by Monday. But for now, there is no hope that the dollar will rise this week. Today, we even sold as low as N810 per dollar. It rose to N845 before the close of trade.”

In an interview with THE WHISTLER, Kalu Aja, a financial analyst and instructor said the speculators were scared of the short-term remedy that the $3bn will have in the FX market.

He also believes that the $3bn will ‘buy the government some time’ for policies that would improve net export.

Ajah said, “It’s the speculators reacting to improved dollar availability to the FGN via NNPC/CBN from advance payment of taxes. It is a short-term fix, its FX availability to fund obligations.

“CBN can’t do anything. The nation has to export more on a net basis to empower the CBN to intervene in the currency market.”