Naira consolidates on forex gains, near convergence rate

The Nigerian currency, Naira, on Wednesday, consolidated on the gains recorded at the various segments of the foreign exchange (Forex) markets, leading gradually to a convergence of rates between licenced Bureau De Change Operators and parallel market.

Due to continuous interventions in the forex market, the local currency at the end of yesterday strengthened further to 363 per US dollar, against 364 sold on Tuesday and sustained at 360 on the Bureau De Change (BDC) window.

The naira, against other major currencies Pound Sterling and Euro, stabilised at 473 and 422 per, respectively at the parallel market.

The Nigerian currency, also, at the official forex market close at 305.60 per US Dollar, the same rate it traded on Tuesday but better by 0.02 per cent, compared to 305.65 exchanged on Monday.

The naira, at the Investor &Exporter FX widow on Wednesday opened at 367.28 better than the 367.72 recorded on Tuesday, indicating growth of 0.12 per cent, and closed at 366.59 against 366.59 the previous day.

The local currency, at the window seen a daily turnover settled at $712.03 million against $83.98 million traded the preceding day, data obtained from the FMDQ OTC has revealed.

Meanwhile, forex dealers believed that series of interventions by the Central Bank of Nigeria (CBN) had impacted the market positively, leading to relative stability in the exchange rate and the achievement of rates convergence.

Trader at the unofficial market said that collapse of rates was skewed in favour of the parallel market, as there were no conditions for the sale of Forex unlike the BDCs.

They believed that parallel market had witnessed increased patronage as Forex buyers now have easier access to it without prior verification of travel documents as operated by the BDCs.

A forex dealer at BDC, explained that the market was a reflection of the forces of demand and supply, adding that the decline in profit at the BDC sector may lead to staff rationalisation if not addressed.

However, if rates adjustment is not done at the BDC sector, the fate of about 15,000 employees of the BDCs are at stake.

It behoove s on the CBN as the regulator of the financial market to use its discretion in this matter as the impending job losses would be one too many for the economy.

Consequently, in line with its commitment to sustain and deepen flexibility in the forex market to further enhance forex flow in the economy, the CBN sold the total sum of $462,336,426.74m.

A breakdown showed that the Retail Secondary Market Intervention Sales received the largest allocation of $267.3m

The CBN also offered the sum of $100m wholesale interventions, while the sum of $50m was allocated to the Small and Medium Enterprises forex window.

Those requiring foreign exchange for Business/Personal Travel Allowances, tuition and medical fees, among others, got a total allocation of $45m.