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Naira holds steady against dollar at interbank

The Nigerian Naira on Wednesday remained stable against United States Dollar to close at N304.75 compared to N304.79 it exchanged for on Tuesday at the inter-bank foreign exchange market.

At the Bureau De Change (BDC), window, the nation’s currency traded at N385 to a dollar, Central Bank of Nigeria (CBN) controlled rate, while the Pound Sterling and the Euro closed at N564 and N509 respectively.

The naira, however, weakened at the parallel market, losing five points to exchange at N470, from N465 traded on Tuesday, while the Pound Sterling and the Euro closed at N565 and 510 respectively.

The local currency, which had been relatively stable against the greenback, fell last week as fresh scarcity hit the forex markets.

Travelex and First Bank of Nigeria Limited commenced sale of foreign exchange to Bureau De Change operators some weeks ago following the approval by the Central Bank of Nigeria. Forex traders, however, said last week that the scheme had failed to ease the biting dollar shortage in the country.

The Naira/Dollar exchange rate at the parallel market opened last 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.

In the futures market, the Central Bank settled $270.6 million in notional value of the maturing October 26 2016, futures instrument on Wednesday. The Apex Bank issued a new 12-month tenor instrument (OCT 25 2017) worth US$1.00billion at N258.50/US$1.00, to replace the maturing instrument. This is in line with the trend since introduction of the futures market.

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.