Reports from the Economic Intelligence Unit (EIU), released yesterday has revealed that speculators are beginning to sell hoarded cash into the market.

Since the Central Bank stopped the sale of foreign exchange to bureau de change operators in July, speculative pressure on the Naira has decreased.

The CBN said it will instead sell foreign exchange only to commercial banks, transacted in the investors and exporters (I&E) window at the official exchange rate.

The CBN claims that BDCs had engaged in rent-seeking behaviour, supplying large volumes to single clients (inviting arbitrage opportunities for resale on the parallel market), rather than distributing the foreign exchange sold to them by the CBN to retail customers in small transactions

According to the report, the CBN now appears to be intervening more heavily with a reserve drawdown of $600million in the past month. A stabilising market is causing speculators to sell foreign exchange that had been hoarded.

Share this: