Naira drops as forex market boosted by $195m
The Naira, on Tuesday relapsed slightly against the US dollar, to close at 366 against 365 sold on the first trading day of the week (Monday), which represented a total four points’ gain, compared to the 369 exchanged last Friday.
This is just as the Central Bank of Nigeria (CBN) boosted the foreign exchange market with the total sum of $195 million, as part of its effort in ensuring liquidity and stability in the market.
Despite this, the Nigerian currency, yesterday, depreciated against Pound sterling, closing at 467 and 470 against 465 sold the previous day but this new rate depended on the buyer’s bargaining strength, however, remained steady at 410 per Euro at the parallel market.
At the official forex market, the naira, also, remained unchanged at 305.95 the same rate it traded on Monday.
But at the Investors & Exporters Foreign Exchange (I&E FX) window, the local currency, opened at a better rate of 364.66 against 366.31 of the preceding day, but closed at a depreciated price of 363.95 compare to 359.00 sold on Monday.
Nevertheless, the apex bank on Monday injected $195 million into the forex market, with a breakdown showing that the sum of $100 million was offered to authorized dealers in the wholesale window, just as the Small and Medium Enterprises (SMEs) window was allocated the sum of $50 million. Those seeking forex for the purpose of BTA/PTA, tuition and medical bills, among other invisibles, received the sum of $45 million.
The Acting Director, Corporate Communications at the CBN, Isaac Okorafor, who confirmed the figures, said the Bank’s continued intervention was aimed at strengthening the international value of the Naira, while ensuring accessibility to the greenback by customers who required it for genuine purposes.
It would be recalled that the CBN, in the last round of forex intervention in the inter-bank market on June 28, 2017, injected a total sum of $195 million to the wholesale, SMEs and invisibles segments of the market.
The central bank has been intervening on the official market in the last few months in an attempt to narrow the spread between rates on the official market and black market. It has sold more than $5 billion since February.
Nigeria is battling a currency crisis brought on by low oil prices, which has tipped Africa’s biggest economy into recession and created chronic dollar shortages.
Nigerian authorities want to attract foreign investors and at the same time maintain a strong currency to ward off inflation.
Meanwhile, foreign investors are pushing for the adoption of the interbank rate as the only official exchange rate.
The new demand by investors followed earlier calls by the International Monetary Fund (IMF) and stakeholders that the CBN unify exchange rates. The Executive Board of the IMF’s Article IV Consultation on Nigeria had in March, urged the authorities to remove restrictions and multiple currency practices.
