SEE WHY: Naira Falls 1.2% On Unofficial Market

The Nigerian naira fell 1.22% against the dollar on the unofficial market on Thursday as nearly half of bureaux de change operators failed to get enough dollars at a central bank sale due to incomplete documentation, traders said.

About 1,599 bureaux de change agents out of 2,818 operators were not allowed participate in the forex sale on Wednesday, limiting dollar supply.

“The central bank has reduced the amount of dollar sold to bureaux de change at its twice-weekly intervention, which has also been cut to once a week now,” Michael Odoh, a bureau de change operator said.

He said the reduction in volume of dollar sales by the Central Bank of Nigeria (CBN) coupled with the traditional year-end surge in demand for foreign currencies by importers have had a negative impact on the naira.

The naira was quoted at 246 against the dollar on the unofficial market, weaker than 243 the previous day.

The official CBN exchange rate is currently 196.50 naira to the dollar.

The naira fall was intensified after the CBN mandated bureaux de change operators to get bank verification numbers (BVNs) of customers buying foreign currency.

The policy, which launched on November 1, has reduced the volume of dollars sold by bureau de change operators and created a dollar scarcity in the market.

However, the CBN has been able to keep a grip on the movement of local currency in the interbank market.

It insisted that the BVN provides a unique identity for each customer under the Know Your Customer (KYC) principle which helps to prevent fraud.

It said the BVN is neither a payment instrument nor an account number and could therefore not be used to access any given account by unauthorised users.

The banks, bureau de change operators and regulators use BVNs to validate the identity of a customer, using some biometric information such as finger prints and photographs obtained at the point of enrolment.