The naira yesterday recorded its first gain against the dollar after the Central Bank of Nigeria (CBN) intervened with an undisclosed amount at the inter-bank market.
The naira yesterday strengthened against the dollar by N2.03k closing at N282.80/$ at the inter-bank market. This represents 0.71 percent compared to N284.83k/$ closed the previous day, according to data obtained from FMDQ.
Currency dealers disclosed yesterday that following Monday’s transactions, which matured today, there was liquidity in the system. The CBN mopped up the naira liquidity using Open Market Operation (OMO).
The implication is that while there is a mop-up in the interbank market leading to appreciation of the naira, liquidity is said to be returning to the interbank forex market.
Some analysts believe that this positive development will engender the confidence of offshore investors who are waiting in the wing for the right moment to invest.
“Foreign investors will likely return when they see liquidity in the dollar – naira market – this still does not seem to be the case. When offshore investors are able to get money out is when they will likely put new money in”, a source told BusinessDay.
Currency dealers affirmed that the Apex bank sold dollars at the inter-bank market to ease shortage of the greenback after it introduced foreign exchange floats.
The CBN had intervened in the market by selling foreign exchange since it ended the currency’s 16-month fix of 197-199 per dollar on Monday. It sold $4 billion in the spot and forwards markets that day, to clear a backlog of demand for hard currency, and subsequently sold about $100 million on the spot market on Tuesday.
At the parallel and autonomous markets, the local currency remained stable due low demand for the greenback. It closed at N340 and N335 against the dollar at parallel and autonomous markets respectively.
The CBN had in a statement signed by Isaac Okorafor, acting director, corporate communication, assured market participants and the general public that it was resolutely committed to making the Nigerian FX market globally competitive, credible, transparent, liquid, and efficient. It lauded market participants that collaborated in their conduct to achieving these feats and looked forward to another successful and historic day on June 27, 2016, when the market launches its innovative hedging product, the naira-settled OTC FX Futures.
