Naira steady at official window, gains N7 at parallel market
The Naira yesterday closed at 493 per US Dollar, against N500 it traded at the parallel market on Friday, but remained unchanged at the official window closing at 305.25 the same rate it sold for the better part of last week.
The naira has been hovering near the 500 level for the past two weeks and was sold in the morning at the same price but gained significantly in the evening, forex traders told our correspondent.
On the official market, it was quoted at 305.25, where it has been trading since last August. The Pound Sterling and the Euro traded at N617 and N528 respectively at the open market.
At the interbank window, the naira was seen quoted by the lenders at 315 to the dollar on Friday but remained stable at the Bureau de Change (BDC) segment of the market exchanging at N399 to a dollar, while the Pound Sterling and the Euro closed at N617 and N528, respectively.
Just last week, the Central Bank of Nigeria (CBN) sold $660 million in three- and five- month currency forwards at an auction aimed at clearing a backlog of dollar demand. But traders say that was not enough to satisfy the market.
However, pressure on the external sector seems to persist as outstanding foreign exchange demand on Forwards Contracts is now put at about USD4 billion despite several auctions by the CBN to reduce it.
Industry expert believed that most of the demands are speculative but the apex has said that it would continue to do its best to clear the backlog.
Consequently, the apex lender on Monday has shown that ts foreign exchange reserves have been rising, though they remain far from their peak of $64 billion in August 2008. The reserves had climbed to a one-year high of $28.28 billion by Feb. 2.
“Despite rising FX reserves, it’s the amount of FX that is supplied that matters. The parallel market, by its nature, is particularly sensitive to demand-supply imbalances, and has a tendency to overshoot,” said Razia Khan, head of Africa research at Standard Chartered Bank.
“Supply of FX matters more than any other factor.”
Traders say the central bank has been selling dollars on the official market to support the naira, but dollar shortages were causing the Nigerian currency to weaken on the black market.
The government has been pressing retail currency operators to narrow what it says is a damaging gulf between the naira’s official rate and the unapproved open retail market.
