Naira gains as rush for festive imports wanes
by HOPE MOSES-ASHIKE
December 27, 2016 | 6:48 am| | | Start Conversation
The nation’s currency on Monday appreciated in value against the US dollar at the parallel market as the rush for festive imports diminishes.
Naira on Monday strengthened against the dollar by N10.00 as it closed to a record high of N485/$. This is 2.02 percent gain compared toN495/$ closed on Friday last week at the parallel market and Bureau De Change (BDC) segment of the foreign exchange market.
Aminu Gwadabe, acting president, Association of Bureau De Change Operators of Nigeria (ABCON) attributed the naira gain to end of rushing hour for festive imports and the expectation of increase in dollar liquidity by the Central Bank of Nigeria (CBN) in the coming year.
The CBN is seeking ways to bridge the gap between the official exchange rates and the parallel markets.
He told |BusinessDay that part of the reason for the firming of the naira was the resolve of the licenced BDCs and ABCON to ensure that genuine travellers get their foreign currency needs at the BDCs sub-sector.
The local currency remained stable at the inter-bank spot market, closing at N305.25 per dollar according to the data from FMDQ.
Last week, Nigerian Naira appreciated against the greenback at the interbank foreign exchange market by 0.04 percent to N315/USD.
However, the Naira depreciated at both the Bureau De Change and parallel market segments by 1.67 percent and 2.06 percent to N488/USD and N495/USD respectively amid persistent scarcity of the greenback.
According to analysts at Cowry Asset Management limited, the announcement by CBN spokesman revealing plans to ensure that the black market is totally eliminated may have led to the further scrambling for dollars during last week and the apparent depreciation of the Nigerian Naira against the US Dollars.
Meanwhile, the weekly movements in most dated forward contracts at the interbank OTC segment implied marginal stability of the Naira relative to the US greenback amid an increase in the foreign exchange reserves – external reserves increased week-on-week by 0.84 percent to USD25.25 billion as at Thursday, 22 December 2016.
The 1 month, 3 months, 6 months and 12 months forward contracts were stable at N320.18/USD, N330.537/USD, N346.07/USD and N378/USD respectively. However, the spot rate depreciated week-on-week by 0.08 percent to N305.25/USD despite USD7.5 million intervention sales by CBN to banks during the week.
This week, the analysts expect some level of stability of the Naira as the markets observe the Christmas and New Year public holidays.
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