… Hits N442, up 15% in one month.
The exchange of the naira was on Monday lifted to an average rate of N442 against the U.S dollar at the black market, after the Central Bank of Nigeria (CBN) auctioned a total of $143 million in forwards at the foreign exchange market.
The CBN offered a total of $143 million to meet bids for forwards, which includes requests for invisibles such as medicals, school fees and personal travel allowances valued at $43 million, through the inter-bank window.
Confirming the figures, the Acting Director, Corporate Communications Department, CBN, Isaac Okorafor, said the wholesale requests will be settled on Tuesday, March 21, 2017, adding that the closing interbank rate for Monday, March 20, 2017, was N307.5/$1.
With the development, it is expected that the Naira will further strengthen in the foreign exchange market in the days to come.
While disclosing that the bank had so far met all the legitimate demands from genuine customers, he reiterated that the CBN would ensure sustainable foreign exchange liquidity and transparency in the process to enable as many customers as possible get access to the foreign exchange they genuinely demand.
He therefore advised eligible individuals with genuine foreign currency needs to freely approach their banks and authorised dealers with their request, stressing that the CBN had made adequate provisions of foreign currency for all such legitimate purposes.
BusinessDay findings show that the naira gained N8.00k over N450 per dollar traded on Friday last week at the parallel market following the sales by the CBN.
The dollar was quoted at different exchange rates across Lagos State. At the Lagos International Airport, and Apapa, the foreign currency closed at N443 per dollar. It traded at N440 per dollar at Festac area of the State, BusinessDay investigation revealed.
With Monday’s trading, naira has gained N78 or 15 percent since the CBN introduced the latest foreign exchange policy. Before the new policy, naira traded at N520 per dollar at the black market.
However, the local currency depreciated marginally at the inter-bank spot market as it closed at N307.50k as against N306.50k traded on Friday last week, data from FMDQ showed.
The CBN has consistently been selling foreign exchange to importers since February in a move to increase dollar supply in the market and narrow the margin between official and black market rate.
Aminu Gwadabe, acting president, Association of Bureau De Change Operators of Nigeria (ABCON) said last night that the speculators and hoarders are going to record huge losses this week.
This development is largely due to the sustained intervention in the interbank market and granting of more access to BDCs at the International Money Transfer Operators (IMTOs) window by the CBN.
“The naira has gained strength from N455 to 435 at the close of business today. The week ahead is going to be a doom week for speculators and hoarders. My expectation is that if both volumes and applicable exchange rates are reviewed for the BDC sub-sector, the naira should be trading at N415 to the $”, Gwadabe said in a text message to BusinessDay.
Gwadabe said developments in the market have completely reduced or eliminated frivolous demand in the market, which hitherto has been one of the major reasons for the naira weakness.
“We expect the Apex Bank to continue its drive to boost forex liquidity in the market. Current external reserves level of $30.3 billion (March 15, 2017) suggests that the CBN is in a healthy position to continue dollar sales to the market”, analysts at Afrinvest Securities limited said.
The strenthening of the naira in the parallel market comes as the Monetary Policy Committee (MPC) of the CBN is expected to announce its decision on Nigeria’s benchmark interest rate today. The rise of the naira has significantly reduced the threat of a spike in inflation, leaving the CBN with headroom to cut interest rates in future even if it does not do that today. The apex bank has been under pressure from the fiscal authorities to cut interest rates in a bid to stimulate growth following the -1.5 contraction in the economy in 2016.