AT the close of trading on Tuesday, the naira settled at N305.27 to the dollar after the Central Bank of Nigeria’s (CBN’s) $1.5million intervention helped it to a rebound from initial record low of N375.50 to the greenback.
This is even as Nigeria plans to sell N119.92 billion ($376.22 million) in short-dated treasury bills at an auction on Nov 16, the central bank said on Tuesday.
A total of N32.43 billion will be sold in the three-month papers, N22.82 billion in six-month bills and N64.67 billion in one-year bills, the central bank said in a public notice; stressing that Payment for the purchases would be made on Thursday.
Nigeria issues treasury bills to fund the budget deficit, manage banking system liquidity and curb rising inflation.
Meanwhile, at the interbank market, traders confirmed that CBN’s sales of dollars to some commercial lenders helped the naira to close at the previous day’s rate of N305 to the greenback.
An official at trading platform FMDQ confirmed a single trade worth $10,000 had been made at a rate of 376.63 early on Tuesday but gave no further details.
Liquidity on the official market remains limited and dealers said importers seeking dollars need to go to the black market, where the local currency traded at N465 on Tuesday, slightly up from N470 a dollar previously.
At the Bureau De Change (BDC) segment, the naira closed at N385 against the dollar, CBN rate, while the Pound Sterling and the Euro closed at N564 and N510 respectively.
However, dealers from an investment banking and research group, Afrinvest (West) Africa Limited said Foreign Exchange (FX) rate remained volatile in the parallel market, attributable to the Apex Bank’s decision to maintain status-quo on Deposit Money Banks suspension (except FBN Limited) from selling dollars to bureau-de-change operators, the restrictions on use of naira debit cards for FX transactions as well as Travelex’s inability to conveniently fulfill all US dollar demands.
Thus, the Naira/Dollar exchange rate at the parallel market opened the week at N455.00/US$1.00 but depreciated to N470.00/US$1.00 by midweek before firming up slightly to N465.00/US$1.00 on Friday last week.
In the interim, “we expect the exchange rate at the parallel market to remain pressured due to restricted access to official windows and surge in dollar demand associated with the festive season. The CBN is yet to guide to a metric that would trigger a shift from its current peg; thus, we expect FX rate at the official market to remain stable whilst the CBN continues to intervene via spot/forward sales of the Greenback,” the dealers stated in an e-mailed note