Naira appreciates to N450/$ as CBN intervenes

THE naira made a significant recovery against the United States dollar as it traded at N450 to the dollar on Monday, February 27, compared to N460/$ it closed on Friday. The local currency also appreciated against the Pound Sterling to trade at N565 from N575 and strengthened against the Euro to trade at N470 from N480.

In keeping with its determination to increase liquidity in the foreign exchange (forex) market, the Central Bank of Nigeria auctioned $230million in forward contracts on the official market after selling $370 million last week to boost dollar liquidity and help narrow the gap between the official and black market rates.

The apex bank also released another $100million into the wholesale forwards segment of the market and an additional $80million into the banks on Monday, specifically for the settlement of dollar demand for school fees, medicals and Personal Travel Allowance (PTA), among others.

In a release by its spokesman, Isaac Okorafor, the CBN said that its commitment to providing enough forex for legitimate business remains unshaken, reiterating that it would do “everything possible” to ensure the steady supply of forex to the market.

It will be recalled that efforts by the CBN in making available large amounts of forex to the market has led to the appreciation of the Naira by over N85 in less than one week. There are fears in the market that the local currency may well be on a permanent journey to its natural value put by some analysts at less than N300 to the dollar.

The CBN had maintained that much of the dollar demand had been a bubble created by speculators and hoarders of the greenback. On a radio programme on Monday the apex bank had warned market players and keepers of dollars to make hay and sell their holdings in order to avoid heavy losses.