Naira and dollar exchange rate at the end of last week maintained stability across segments of foreign exchange market following increased supply by the Central Bank of Nigeria (CBN).
The CBN offered $100 million forex wholesale auction in the interbank market but currency dealers could only buy $85.69 million.
Naira was quoted at the rate of N379.04 to the dollar on Friday, the same level it was the previous day. Similarly, the local currency closed stable at N305.85 per dollar, according to the data from the FMDQ. At the parallel market, naira also traded stable, closing at N390 per dollar.
Isaac Okorafor, acting director, corporate communication, said the inability of authorised dealers to pick up the whole amount offered by the CBN was a pointer to the fact that there was enough foreign exchange to meet legitimate forex demands within the system.
While stressing that the CBN had the capacity to sustain the current levels of liquidity in the forex market, he said the bank was committed and was indeed working to achieve convergence in the forex rates between the interbank and the Bureau de Change (BDC) segment.
“I expect lots of dollar liquidity to ensure a strengthened naira,” Aminu Gwadabe, president, Association of Bureau De Change Operators of Nigeria (ABCON), told BusinessDay.
Reviewing the performance of the investors and exporters foreign exchange window introduced by the CBN last week, analysts at the Afrinvest Securities Limited said, “the implementation of the IEFW since the market first opened for trading on Monday has been largely inspiring as our interactions with dealers suggest that rates have been independently determined by market forces through willing counterparties (buyers and sellers) though liquidity is still a constraint as participants are still trying to study the operational framework, depth and sustainability of the market structure.”
The analysts were concerned that oil exporters and International Money Transfer Operators (IMTOs) are exempted from supplying currency in the window – oil exporters are matched to petroleum marketers while IMTO’s have a separate market with a different pegged forex rate.
However, the CBN has also steered clear from handholding dealers, except for occasional interventions in the market in a more market-friendly manner of individually dealing with counterparties (banks) instead of wholesale auctions open to bidding.
“We expect rates at the official market to trade at current levels on the back of sustained interventions by the Central Bank. However, we do not rule out a further depreciation in rates at the Investors and Exporters Window as investors test the liquidity and depth of the window,” the analysts said.
