Naira steadies at parallel market, appreciates at interbank

The Naira on Tuesday remained unchanged at N393 to the U.S dollar at the parallel (black) market, as it was on Monday, August 15. This would leave Naira’s black market value unchanged for two consecutive days after gaining strength from the N395/$1 rate it was last week.

This is even as the Bankers’ Committee has agreed that commercial banks can now sell a maximum of $50,000 foreign exchange (FOREX) to De Change (BDC) operators. The Central Bank of Nigeria (CBN) had previously fixed $30,000 as the limit that commercial banks could sell to BDCs..

In the same vein, the local currency appreciated at the inter-bank market to close at N313.65 from N317.34 posted on Monday. At the same market segment, the Nigerian currency closed at N402.0275 to the Pound Sterling and N449.67 to the Euro.

At the Bureau de Change (BDC) segment of the market, the Naira hovered around at N385, N505 and N420 against the dollar, the Pound Sterling and the Euro, respectively, which are  the same level it traded on Monday.

Currency traders told Nigerian Tribune that the naira would strengthen further in the coming weeks as most banks had concluded plans to sell Foreign Exchange (Forex) to BDCs.

Currency analysts at Afrinvest (West) Africa Limited said liquidity crunch in the foreign exchange market continued last week as the local unit further depreciated Week-on-Week (W-o-W).

At the inter-bank, spot rate hovered between N312.00/US$1.00 and N317.00/US$1.00 from Monday to Thursday. However, intraday spot rates rose as high as N320.00/US1.00 and N327.00/US$1.00 on Tuesday and Thursday before the Apex Bank intervened with dollar supply on both days.

According to traders, sentiments in the futures foreign exchange market also weakened last week as the 1-Year forward rate depreciated to N349.30/US$1.00 from N345.42/US$1.00 last week.

“We believe the exchange rate will remain pressured in the interim until autonomous players return to the market to relieve the CBN of its role of major dollar supplies at the inter-bank.

“We are of the view that the depreciation of the Naira, the reforms in the foreign exchange market coupled with current attractive yield environment should buoy foreign investor sentiment in Nigerian assets and aid the vital return of foreign capital to the market,” dealers at Afrinvest stated in a note to investors.

Meanwhile, Minister of Agriculture, Chief Audu Ogbeh was quoted to have revealed last week that: “Demand for dollars from Nigerians is $2.5billion a week, I was reliably told, but we don’t have it, we don’t print dollars and people are angry we don’t make it available.”

At the end of the Bankers’ Committee meeting in Abuja on Tuesday, the Managing Director of UBA, Kennedy Uzoka, told journalists that the CBN decided to increase the limit to drive down the price of getting FOREX.

Mr. Uzoka said the decision was informed by the plight of parents and guardians who have not been able to get enough FOREX to pay the school fees of their wards at schools, particularly at this time that schools are about to open and people would require Basic Travel Allowance (BTA) and personal transport allowance (PTA) to travel. Members of the bankers’ committee urged BDCs to henceforth approach banks and apply for FOREX allocations foreign exchange.

The bankers’ committee said the decision was not a reversal of the previous one, but a review as part of efforts to help the country find solutions to the FOREX supply crisis.