Currency Traders Lament As Naira Gains More Value Against US Dollar At Official And Parallel Markets

There were a series of lamentations yesterday by currency traders over the increasing losses and decreasing demand for the dollar as the naira continued to strengthen in both the official and parallel markets.

Naija Latest Gist understands that the losses were a result of a 12% decrease, equivalent to N152.23, in the exchange rate for bureaux de change (BDC) to N1,117.5 per dollar set by the Central Bank of Nigeria (CBN).

Recall that the apex bank had earlier announced the ban on the use of foreign-denominated collaterals for naira loans.

It, however, exempted from the ban all Eurobonds issued by the Federal Government of Nigeria or Guarantees of foreign banks, including Standby Letters of Credit.

In a circular issued by the apex bank titled “The Use of Foreign-Currency Denominated Collaterals for Naira Loans”, the Director, of Banking Supervision Department, CBN, Dr. Adetona Adedeji, said: “The Central Bank of Nigeria has observed the prevailing situation where bank customers use Foreign Currency (FCY) as collaterals for Naira loans.

“Consequently, the current practice of using foreign currency-denominated collaterals for Naira loans is hereby prohibited, except, where the foreign currency collateral is: Eurobonds issued by the Federal Government of Nigeria; or Guarantees of foreign banks, including Standby Letters of Credit.”