Naira closes at 380/$1, as CBN injects $100m into FX market

Following the closure of the official foreign exchange market for last week’s trading, which was extended to Monday 29 May, 2017, due to the holiday declared by the federal government for the 18th year uninterrupted democracy day celebration in the country, the Nigerian currency, the Naira, on Tuesday closed at 380 per US dollar, representing an appreciable growth of two points compared to 382 sold during the holidays.

The naira strengthened slightly after the Central Bank of Nigeria (CBN) yesterday sold $100 million at a special wholesale spot and forwards auction to improve dollar liquidity in the foreign exchange market and curb pressure on the local currency.

The local currency, however, remained unchanged against the pound sterling at 491 the same amount sold on Monday but better than 492 traded the previous day, but depreciated against the Euro at 426 compared to 422 sold at the unofficial market over the weekend

The naira, at the official market was also stable at 305.35 to the dollar, the same rate it closed last trading week on Friday.

But at the Bureau De Change (BDC) window, no changes were recorded yesterday as the naira steadied at the regulated rate of N362 to the Dollar, while the Pound Sterling and the Euro closed at N495 and N423.

Consequently, the apex bank has continued injection inject fresh capital to boost liquidity in the forex market, with injection of forex to lift the foreign exchange market.

The bank, in a notice to commercial lenders, said the dollar auction would be both for spot and forward settlements and would be settled within the next 60 days.
Africa’s biggest economy shrank by 1.5 percent in 2016 in its first recession in 25 years, hit by a shortage of hard currency and lower revenue from its dominant oil sector as world crude prices remained under pressure.
The central bank has been intervening on the official market to try to narrow the spread between the official interbank and black markets. It has sold around $4 billion since February, but analysts doubt that this pace can be sustained.
Nigeria’s foreign exchange reserves had dropped 0.87 percent to $30.49 billion by May 25 from a month ago.
The local currency was quoted at 380.33 per dollar at the investor window on Tuesday, according to the market regulator FMDQ OTC Securities Exchange.
It was quoted at 382 a dollar on the black market, while commercial lenders quoted the local currency at 305.85 per dollar on the interbank market