Naira settles at 390/$1 as multiple FX rates eliminate frivolous demand

CBN offers $100m in wholesale forwards

The nation’s currency, the naira on Thursday settled at 390, a slight depreciated rate against the 388 traded per dollar on Wednesday at the parallel market.

This is just as the Central Bank of Nigeria (CBN) said that multiple exchange rate has eliminated “frivolous demand” of foreign currency, while offered the sum of $100 million to authorized dealers to meet the requests of wholesale customers at the forex auction in the interbank wholesale window on Thursday, April 27, 2017.

The naira dropped a total two points to close at N390 to the dollar, while the Pound Sterling and the Euro traded at N495 and N415, respectively.

At the Bureau De Change (BDC) window, the naira was sold at N362, while the Pound Sterling and the Euro closed at N490 and N420, respectively.

Trading at the interbank window saw the naira close at N305.85 to the dollar. However, the naira, appreciated marginally at the investment and export window, as it closed at N379.04, from the N379.89 it opened earlier on Thursday.

Traders at the market were hopeful that the naira would bounce back as the CBN sustained liquidity boost at the BDC subsector.

Meanwhile, the Acting Director, Corporate Communications Department at the CBN, Isaac Okorafor, said the multiple exchange rates was aimed at improving dollar supply while allowing investors to trade their own dollars at a more market-determined rate.

He, however, noted that no intervention was made in the retail window in yesterday’s auction, adding that the Bank continued its weekly sale of forex to the Bureau de Change (BDC) segment to meet the needs of low-end users.

Furthermore, he said the CBN had observed that quite a good number of dealers were adhering to the forex guidelines. Nevertheless, he said the CBN will continue to monitor the activities of authorized dealers to ensure that no outfit or individual circumvents the laid down forex rules.

It would be recalled that on first trading day of the week, the bank said it would allow market forces to set exchange rate for portfolio investors, a move intended to attract foreign investors that fled the country at the start of the latest currency crisis.

The move introduces yet another exchange rate to the five existing ones. Still, analysts doubt its sufficient to draw inflows into Africa’s biggest economy as it masked pressure on the naira with the regulator trying to avoid a devaluation.

The naira traded at 305.85 to the dollar on the official interbank market on Thursday and 390 on the black market. It was quoted at 379.89 on investors’ window.

The central bank has been intervening continuously on the spot and forward markets to prop up the naira. On Thursday it offered $63 million to exchange bureaus at 360 to the dollar and auctioned another $100 million in forwards, traders said.

The president of Nigeria’s association of bureau de change, Alhaji Aminu Gwadabe, said its group has already commenced consultations with some foreign investors with a view to increase dollar supply in the parallel segment of the market.
Gwadabe noted that retail currency bureaus are trying to attract more foreign capital with the cooperation of the central bank, to boost dollar liquidity and provide support for the local currency.