Naira bounces back, gains at all forex segments

The Naira on Tuesday bounced back at all segments of the foreign exchange market, from its recent sharp drop after weeks of continuous gains at the parallel market.

The local currency yesterday appreciated by five points, closing at 390 to a dollar against Monday’s depreciated rate of N395 to the dollar from N393 recorded on Friday.

The naira also strengthened against the pound sterling and the Euro on Tuesday with the closing rate of N475 and 410 against N480 and N415 traded respectively the previous day.

At the interbank market, the Nigerian currency stood at N312.66 per dollar against the Monday exchange rate of N315.63.

But at the Bureau De Change window, Naira was sold for N362 to the dollar, while the Pound Sterling and the Euro closed at N483 and N430 respectively. This was just as the Central Bank of Nigeria (CBN) commenced the adjusted sale of $10,000 forex to the low-end forex dealers once a week.

Trading at the interbank market saw the Naira dropped slightly to at N306.25 against N306.3 per dollar traded on Monday.
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Traders at the market expressed optimism that the naira would bounce back as the CBN continued to boost liquidity at the interbank market and the BDC sector in the week.

Meanwhile, Alhaji Aminu Gwadabe, President, Association of Bureau De Change Operators of Nigeria, said the apex bank had reduced the time lag between the funding of their accounts and the disbursement of foreign exchange.

Gwadabe said with more liquidity at the BDC window and effective distribution of foreign exchange, the naira was well positioned to bounce back.

He said that the improved inflows of Diaspora remittances into the economy, in spite of falling oil prices, would fast track rate convergence and unification.

According to him, the increased inflows will help the CBN to address the dwindling confidence of foreign investors in assuring them of meeting the liquidity needs of the BDC sub-sector rather than that of the inter-bank market.

The financial operator explained that foreign investors relied heavily on the liquidity from the BDC sub-sector in informing their decisions on the economy.

“The impacts of this development will afford the CBN to glut the BDCs sub-sector for a better rates stabilisation,’’ Gwadabe said.

The association’s president urged currency hoarders and speculators to stay away from their nefarious activities as the naira would soon rebound to glory.

In a bid to liberalise the foreign exchange market, the apex bank had on Aug. 30, 2016 licensed 11 additional IMTSOs.

The apex bank had on Monday flooded the foreign exchange market with $240 million to meet effective demand.

The bank released the sum of $90 million to meet requests for invisibles such as travel allowances, medical and school fees.

CBN also on the same day, offered a total of $150 million to authorised dealers in the interbank wholesale auction window.