Naira sustains gains as FX market lifted by $657.3m

The Nigerian currency, Naira, over the weekend, sustained the points garnered during the trading week, at the parallel segment of the foreign exchange market. The Nigerian currency exchanged at 364 to a dollar, 474 per pound sterling and 424 to the Euro, respectively.

This was just as the Central Bank of Nigeria (CBN) boosted liquidity twice within the week in various segments of the inter-bank foreign exchange market, with the total sum of $657.3 million.

The Naira, last Tuesday, recorded the first gains of the week, to close at 365 per dollar against 367 sold on the first trading day of the week under review, with the forex market receiving the first injection of liquidity into its various segments totaling $195 million on Monday, 24 July, 2017.

However, on Wednesday, July 26, 2017, the local currency strengthened further to close at 364 to the US Dollar at the parallel mat, compared to 365 exchanged the previous day.

The naira, stabilised at the same rate on Thursday and Friday, after the CBN, in line with its commitment to sustain and deepen flexibility in the foreign exchange market, intervened for the second time in the week under review with the total sum of $462.336 million, putting the total figure released within the week to $657.3 million

However, a breakdown of the forex intervention figures obtained, indicated that the Retail Secondary Market Intervention Sales (SMIS) received the largest allocation of $267,336,426.74m from the second intervention of $462.336m.

But, the invisibles segment, comprising Business/Personal Travel Allowances, tuition and medical fees, among others, received $45 million each from the two interventions within the week.

The CBN also offered the sum of $100m as wholesale interventions, as well as the sum of $50m was allocated to the Small and Medium Enterprises (SMEs) forex window in the recent interventions but had earlier boosted by $100m, with other forex windows received $50m from the first tranche of the apex lender liquidity injections.

But at the official foreign exchange market, the local currency, which had traded at a better rate of 305.70 per dollar on Thursday, relapsed to record a new rate of 306.65, losing a 0.31 per cent.

At the parallel market, the naira, which had opened at a depreciated rate of 367.75 at the Investors’ and Exporters’ FX window on Wednesday, strengthened by 0.25 per cent to open at a better rate of 366.82 on Thursday; and it extended the gaining streak to close at 362.29 per cent per dollar, against 368.60 sold the preceding day.

The naira, however, at the Investors’ & Export FX’s window on Friday, at a better rate of 366.11,against 366.82, opened the previous day, representing a growth of 0.19 per cent, but closed at depreciated rate of 367.60, compared to 362.29 it did on Thursday, indicating a drop of 1.47 per cent.

The total volumes traded in the Investor’s & Export FX’s window on the last trading day of the week, also dropped with the closing figure of $53.65m against $75.32 settled in the preceding day.

However, the naira maintained its steady rate against major currencies around the globe, appreciating to N360/$1 in the BDC segment of the market, as at the close of the official forex market on Friday, July 28, 2017.

Although, the I&E FX widow, registered a total turnover of $1.81 billion in the month of June, which indicated an increase of 37.73 per cent ($0.49bn) when compared with volumes recorded in May ($1.32bn), according to the latest monthly report of the FMDQ OTC.

Meanwhile, confirming the latest forex intervention figures, the Acting Director of the Corporate Communications Department, Mr. Isaac Okorafor, said the leadership of the CBN was impressed by the positive impact its current foreign exchange management was having on the manufacturing sector, agriculture and economic activities in general across the country.

While reiterating that the CBN was also encouraged by growth in the non-oil sector, particularly agriculture, he noted that the apex bank would not relent in its efforts at sustaining stability in the inter-bank Forex market, as well as, ensuring the convergence between the exchange rates at the Nigeria Autonomous Foreign Exchange (NAFEX) and the Bureau de Change segments of the market.

According to him, the CBN will continue to ensure proper surveillance of the forex market to guard against any sharp practices by participants and uphold transparency of the process.