Naira stable as CBN injects $100m FX

The Nigerian currency, the naira closed on Monday at N380 the same range it closed over the weekend against the Dollar at the parallel market, as the Central Bank of Nigeria (CBN) sold $100 million at a special wholesale spot and forwards auction, in order to improve dollar liquidity and ease pressure on the local currency.

The naira traded between N385/ to 381 in most part of last week but appreciated to the current rate on Friday before the official foreign exchange market closed for last week.

But the local currency appreciated against the Pound sterling from N495 to 488, gaining a total of seven points and steady at 420 to the Euro at the unofficial market.

It is however, worthy of note that the Nigerian economy, grappling with a currency crisis brought on by low oil prices which is responsible for the acute foreign exchange even though the apex bank has continued to inject dollars in the forex market to narrow the gap between the official and black market rates.

The Daily Times checks, put the central bank dollar sale to various sector of the Nigerian economy to no less $4 billion since its forex intervention in February this year, which many financial stakeholders believe to have recorded positive changes in the value of the naira, as liquidity in the official market has jerked up over the time while easing the pressure on the naira.

Traders, citing a notice from the regulator, said the currency forwards being auctioned on Monday would be settled within 60-days and backed by customer demand.

The naira was quoted at 381.91 per dollar at the investor window on Monday, quoted at 315 a dollar on the official interbank market by commercial lenders, this according to the data obtained from the official website of FMDQ OTC Securities Exchange.

The naira has firmed on the black market from its record low of 520 to the dollar in February, before the central bank’s intervention in the foreign exchange market.

Consequently, the CBN was reported to have injected $457.3million into various segments of the foreign exchange market, a decisive move to bridge the gap between the official market and parallel market.

The CBN last month introduced a new special foreign exchange window dedicated to investors and exporters. Also, the apex banking regulating body in the same month unfolded yet another policy measure, with the introduction of special window for small and medium scale enterprises (SMEs).

According to experts, the naira’s outlook remains stable and confidence has increased as the regulator steps up efforts to improve liquidity and achieve exchange rate stability.

The Managing Director, Enterprises Stockbrokers Plc, Mr. Rotimi Fakayejo said sustained CBN’s intervention has continued to create confidence in the market.

He said CBN’s supply of foreign exchange to Bureaux-de-Change (BDC) operators and special foreign exchange window dedicated to investors and exporters have contributed to Naira appreciation recently.

According to him, “the sustained CBN’s foreign exchange intervention has led to foreign inflow which also augmenting the effort of the CBN.

“Investors in the foreign exchange market are trying to be cautious and nobody wanted to hold. We expect that the foreign exchange supply to the BDC is also another area that has contributed to foreign exchange stability,” he explained.