Naira closes at 500/$1, traders anticipate further stability next week

The Naira yesterday closed at 500 per US dollar, the same rate it exchanged on Wednesday when it recorded first depreciation of the week, but foreign exchange traders are optimistic that the Naira holds steady outlook by next and may not drop further at the parallel market.

The naira, late yesterday, was bought at 498 and sold at 500 per dollar, while Euro and Pound Sterling were sold at 529 and 613 respectively.

At the official window, there were no changes recorded at the close of trading on Thursday with the Naira steady at N305.25 to the dollar and quoted at 399 to the greenback at the Bureau de Change (BDC) segment of the market.

Forex traders sold the N500 to a dollar rate on the black market, a notch weaker than 498 a dollar last week.

However, optimistic that the local currency will remain around its present range after it crossed the 500 per dollar mark early this week as investors look ahead of a $1 billion euro bond issue expected to boost support for the naira.

Traders said while the apex bank has been selling dollars on the official market to support the naira, dollar shortages were causing the naira to weaken on the black market.

“The naira is not likely to fall further in the near term on the black market because of possible resistance of buyers and confidence boosting provided by the rising forex reserves and planned Eurobond issuance,” one senior currency trader said.

Just recently, the Central Bank of Nigeria (CBN) said that the monthly supply of dollars at its disposal had dropped to between $600m and $700m.

While the bank had a stock of up to $3 billion monthly in 2013 and 2014, it said the forex scarcity that hit the country lately had left it with roughly $700m.

The Deputy Governor, CBN, Mrs. Sarah Alade, who appeared before an ad hoc committee of the House of Representatives in Abuja, explained that the forex scarcity was the reason why the apex bank was unable to meet all demands, particularly those coming from importers of petroleum products.

The ad hoc committee, which is headed by a member from Imo State, Mr. Nnana Igbokwe, is conducting a public hearing on the review of the pump price of petrol from N145 to N70.04 as proposed by the House.

The committee had summoned the Governor of the CBN, Mr. Godwin Emefiele, to respond to the allegation by importers that the bank was denying them access to forex.

Emefiele was also to explain how International Oil Companies got involved in the sale of foreign exchange to importers and petroleum marketers in the country.

But Alade, who represented the governor, told the committee that it was impossible to meet every forex demand in the light of the present scarcity.

She said, “Things are not the way they used to be. There is a shortage of foreign exchange. In 2013 to 2014, the Federal Government used to get $2bn to $3bn monthly, and the CBN in the interbank market sold about 30 percent of that. Seventy per cent came from foreign investors.

“Today, we get $600m or $700m. Nothing comes in from the interbank market; $1.5m is sold every day and $1bn was done in December to clear matured Letters of Credit. It’s not the way it used to be.”