Naira drops against major currencies, as FX market lifted with $254.3m
…gains 20k at official forex market
Despite lifting the retail segment of the Nigerian Inter-bank Foreign Exchange (Forex) Market with a total sum of $254.3million, the nation’s currency, the Naira, over the weekend, failed to uphold the appreciable rate of 365 per dollar sold on Wednesday and Thursday, and the sustained rates of 468, 412 against Pound and Euro, respectively, at the parallel market.
The new Naira’s rates indicated a total loss of four to five points against the dollar, as it traded at 369/370, while closing at 470 and 420 to a Pound and Euro, respectively, against 468 and 412 traded in the previous day, which represented total drop of two points and eight points, respectively at the parallel market.
Although, the local currency, on Friday, recorded slight gain of 20 kobo at the official forex market, to close at 306 per dollar, compare to 306.20 exchanged on Thursday, data from the official website of FMDQ has revealed.
At the Investors & Exporters Foreign Exchange (I&E FX) window, the naira, opened at a more depreciated rate of 3654.68 compare to 365.66 opened on Thursday, but at a better closing rate of 365.02 against 366.00 did the preceding day.
Meanwhile, the naira exchanged at an average of N364/$1 in the Bureau de Change segment (BDCs) across major trading points in Lagos, Abuja, Port-Harcourt and Kano on Friday.
With the new injection of dollar into the forex market, the apex bank has explained that this followed bids received from forex dealers, while it determined in ensuring liquidity and stability in the forex market.
Therefore, prompted the injection of $254.3million, which was sold for companies in the raw materials, agricultural, airline and petroleum industry.
It would be recalled that the central bank, at its last intervention in the Retail Secondary Market Intervention Sales (SMIS) on June 23, 2017, injected a total of $240 million for spot and forward deals, just as it intervened with the total sum of $390 million in the wholesale, SMEs and invisible segments of the market on June 28 and July 3, 2017.
Okorafor, however, assured that the apex bank remained very committed to ensuring that all the sectors continue to enjoy access to the foreign exchange required for their businesses.
He explained further that 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.
The CBN sold dollars twice last week, thereby tightening naira liquidity, traders said. It also sold 25.67 billion naira in treasury bills on Wednesday, which further pushed up borrowing costs.
However, foreign exchange traders said that the interbank lending rate rose to around 15 per cent on Friday, from 5 per cent last week after commercial lenders paid for dollar and Treasury bill purchases, draining liquidity.
“The interbank rate traded above the 40 percent level on Wednesday,” the trader said, because of the treasury bill auction. He said rates later dropped sharply after the central bank repaid matured bills worth 65 billion naira.
Borrowing costs are expected to rise next week, since the central bank may keep up its forex interventions to stabilise the local currency, traders said.
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.
