Naira strengthens to N281.23/$ at interbank market

The floating naira exchange rate ended at N281.23 to a dollar on Wednesday, slightly stronger than the N282.3 to the dollar it traded at on Tuesday.

This is even as the Central Bank of Nigeria (CBN) and Citibank on Wednesday executed the country’s first naira-settled futures trade against the dollar, market regulator FMDQ OTC Securities Exchange said.

On Monday, the central bank introduced an over-the-counter futures market on the currency, to help manage dollar demand, quoting the naira firmer at N279 to the dollar in a month’s time and at N210 by April next year.

However, the Naira maintained the same level of exchange rate with Euro and the British Pounds as it traded for N371 to the British Pounds, N310 to the Euro and N42.39 to the Chinese Yuan at the interbank market.

At the parallel (black) market, the situation is returning to business as usual, as the effects of the new foreign exchange regime seem to be gradually fading out of the market operations.

The local currency gained N2.00 on Wednesday, as it closed at N350 to the dollar, according to the Acting president of Bureau De Change Association of Nigeria (ABCON), Alhaji Aminu Gwadabe.

On Monday, the naira lost ground to the dollar, falling from N345 on Friday to N347, only to fall further last Tuesday to N352.

Similarly, Nigerian Tribune findings revealed that many banks are transacting at the “floating” interbank market rate of N280 to N284 to the dollar, while some have banned international transactions with Naira cards altogether.

In a mail sent by Stanbic IBTC to its customers on Tuesday, the bank said it was charging N310 to the greenback, as against N282.3, which the interbank market traded on the same day.

“We wish to inform you that you can now stay up date on our card rates by simply visiting our website,” the mail read in part.

The bank went on to say: “Please find below our current card rate: 1GBP = N424.07, 1USD = N310, 1EUR = 341.63. Please note rates may vary from time to time,” the email read.

The three currencies traded at the interbank market on Tuesday at N371, N282.3 and N310 respectively, showing a variance of N53.07 on the pound, N26.7 on the dollar and N31.63 on the European currency.

Guaranty Trust Bank and Access Bank were also charging between N330 and N340 against the US dollar.

The rate at which Wednesday’s futures deal by CBN and Citi Bank was done, and the size of the trade was not disclosed, but some dealers said about $20 million were traded.

The bank had last week auctioned $3.5 billion on the futures market to clear a backlog of currency demand after it lifted its 16-month-old peg to allow the Naira trade freely on the interbank market.

It sold $697 million in one-month futures, $1.22 billion in two-month contract and $1.57 billion due in three months, in order to clear a backlog of $4.02 billion of demand.

In the non-deliverable forwards market, dealers said the Naira rose against the dollar on Wednesday, with the one-month contract quoting the currency at N283, converging almost with the spot market, which traded the naira at N281.23.