With N3 difference, parallel/official FX rates near convergence

The naira depreciated to N1,470 per dollar at the parallel section of the foreign exchange (FX) market on Friday.

The current FX rate represents a 1.38 percent depreciation from the N1,450 traded on May 8.

Currency traders, known as bureau de change (BDC) operators, quoted the buying rate at N1,430 and the selling price at N1,470 — leaving a profit margin of N40.

At the official section of the FX market, the naira declined by 0.45 percent to N1,466.31 on Friday — from N1,459.73 on May 9.

FMDQ Exchange, a platform that oversees the official FX trading in Nigeria, said the naira recorded a high of N1,490 and a low of N1,322.

At the current rate, the dollar value at the parallel market surpassed the official window rate by N3.69.

On May 7, the Central Bank of Nigeria (CBN) reviewed its directive on the repatriation of export proceeds by international oil companies (IOCs).

“The initial 50% of the repatriated proceeds can be pooled immediately or as at when required. Banks may submit the request for cash pooling ahead of the expected date of receipt, supported by the required documentations, for approval by the Central Bank of Nigeria,” CBN said.

“The 50% balance of the repatriated export proceeds could be used to settle financial obligations in Nigeria, whenever required, during the prescribed 90-day period.”

Earlier in February, the regulator had placed limits on the transfer of proceeds from crude exports by IOCs to offshore parent company accounts as part of reforms to curb the volatility in the FX market.

CBN had said the transfer of funds by the IOCs has an impact on liquidity in the FX market.