“The BDCs are awash with cash. Remember that the central bank sold about $200,000 to each BDC at some point and they had also bought dollars at high rates which they hoarded, thinking that the naira would remain in a free fall.
But with the CBN’s intervention, they are stuck with loads of dollars and little or no customers, so they have stopped buying dollars and are looking for avenues to offload what they bought at ridiculously high rates.
Essentially, the speculative attacks on the naira has come back to haunt them and they’ve got their fingers burnt,” he said.
The CBN Governor, Mr. Godwin Emefiele, on Tuesday expressed optimism about the convergence of the FX rates on the official and parallel markets, stating that the gains made by the naira against the greenback in the last five weeks was not a fluke.
“I am happy, indeed very gratified, that the interventions have been positive, we have seen the rates now converging and we are strongly optimistic that the rates will converge further.
In terms of sustainability, I think it’s important for us to say that the foreign reserves at this time are still trending upwards to almost $31 billion as I speak with you.
And the fact that we have done this consistently for close to five weeks, should tell everybody or those who doubt the strength of the central bank to sustain this policy,” he had said after the meeting of the Monetary Policy Committee (MPC).