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Naira takes its biggest hit in decades after CBN ban on forex sales to BDCs

From JAMES NWABUEZE, Abuja

It was a bad day yesterday for the national currency, the naira, as it fell significantly against the U.S. dollar at the parallel market on the heels of the Central Bank of Nigeria (CBN) ban on forex to Bureau De Change operators.

The local unit, which opened at today’s trading session at N505 per $1, was trading at N522 in the noon of yesterday to a dollar at the parallel market segment, data from abokiFX.com, a website that collates parallel rates in Lagos, showed.

This implies a N17.00 or 3.40 per cent devaluation from N505.00, the rate it closed at the previous session of the black market on Tuesday. It is the currency’s biggest fall ever.

The CBN governor, Godwin Emefiele, had announced Tuesday that the apex bank would no longer sell forex to Bureau De Change as an official parallel window, meaning that the operators would revert to their old, outright black-market transactions.

He explained that the parallel market operations had become a conduit for illicit forex flows and graft.

Speaking shortly after the July Monetary Policy Committee (MPC) meeting, Mr. Emefiele, who announced that the bank had retained its benchmark policy rate, said that weekly sales of foreign exchange by the CBN would henceforth go directly to commercial banks, adding that the CBN would also call off the processing of applications for BDC licences in the country.

“We are concerned that BDCs have allowed themselves to be used for graft,” Mr Emefiele lamented.

There are fears that the new forex policy would push up prices of goods and services at a time of high inflation hand mass unemployment.

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