05 February 2015, Abuja – In order to improve liquidity in the Bureau De Change (BDC) segment of the foreign exchange market, the Central Bank of Nigeria (CBN) has disclosed plans to conduct a special intervention in that segment of the forex market this Friday.
Specifically, the banking sector regulator said it will sell $30,000 each to interested BDCs.
The CBN stated this in a letter titled: “Special Intervention in the Bureau De Change (BDC) Segment of the Foreign Exchange Market,” dated February 3, 2015, that was posted on its website.
The letter addressed to all BDCs and authorised dealers was signed by Director, Trade and Exchange Department, CBN, Olakanmi Gbadamosi.
It stated: “This is to inform all licenced BDC operators that in order to improve the liquidity in the BDC segment of the foreign exchange market, the CBN will be intervening in the market by selling $30,000 to interested BDCs on Friday, February 6.
“This is in addition to the weekly sales to the operators. Interested BDC operators are therefore advised to fund their accounts on or before Wednesday February 4, 2015 to accommodate the proposed intervention of Friday.”
The central bank had last month increased the weekly supply of dollars to the BDC operators from $15,000 per BDC, to $30,000 per BDC.
The banking sector regulator had said the move was also part of measures to deepen the BDCs segment. The policy took effect on January 28th. While the CBN had stated then that it would sell the greenback to BDCs weekly at the prevailing interbank rate, it had also warned the forex dealers not to sell to the public at more than 3.5 per cent of its selling rate.
JP Morgan analysts had placed Nigeria on a negative watch for the next three to five months following reservations over the country’s foreign exchange position and the bond market which was described as illiquid.
But the CBN Governor, Mr. Godwin Emefiele, had urged investors and Nigerians not to panic and had also restated its determination to support the naira.
Meanwhile, the Debt Management Office said it plans to raise N90 billion in sovereign bonds with maturities ranging between five and 20 years at its next regular auction on February 11. The debt office said it will auction N35 billion worth of the 5-year bond, N30 billion of 10-year paper and N25 billion of the 20-year debt note, using the Dutch Auction System.
The 5-year debt note is a fresh issue, while the 10-year and 20-year bonds are re-openings of previously issued paper.
*Obinna Chima – Thisday