Naira firms after CBN boosts forex supply with $389million

The nation’s currency which traded at the rate of N390/N391 to the U S dollar in the early and middle of last week, on Friday appreciated to N388 per dollar, after the Central Bank of Nigeria (CBN) sold a total of $389 million at the foreign exchange market.

Having gained N2.00k on Friday and with the level of liquidity in the market, analysts anticipate further appreciation of the naira even as the CBN sustain its interventions this week.

“We expect appreciation at the alternative market segments amid sustained rise in foreign exchange reserves, although subject to CBN‟s level of intervention”, analysts at Cowry Asset Management limited said.

Analysts at Afrinvest Seurities limited said “we expect the Central Bank to continue to boost market liquidity through its foreign exchange interventions at the official windows. However, we remain wary about the depth of the Investors and Exporters window as International Oil Companies (IOCs) and International Money Transfer Operators (IMTOs) – major suppliers of forex – are not allowed to participate yet”.

The retail segment of the interbank forex market received a huge boost on Friday, May 5, 2017, as the Central Bank of Nigeria (CBN) intervened with a total sum of $388.66 million sold to authorized dealers in that sector of the market.

Friday’s figures were the results of the bids submitted by dealers since Tuesday, May 2, 2017.

Confirming the numbers, the Acting Director, Corporate Communications Department at the CBN, Isaac Okorafor, disclosed that the sum of $87.885 was for spot sales, while $300.8 million was sold as forwards.

Okorafor further explained that the forwards were sold into three tenors of 30, 45 and 60 days respectively. According to him, the Bank sold $100.95 as 30-day forwards; $110.48 million as 45-day forwards and $99.37 as 60-day forwards.

While also confirming that the Bank continued with its intervention in the Bureau de Change (BDC) segment of the market to meet the needs of low-end users, the spokesman said the Bank remained resolute in ensuring that it supplies enough forex to genuine customers and in the process sustain liquidity in the market.

With this development, he expressed hope that the CBN will inch even much closer to its objective of convergence of the rates in the interbank and BDC segments.

It will be recalled that the CBN in the course of the week intervened in the wholesale and invisibles segments of the market with amounts valued at over $346 million to ease access to foreign exchange by different categories of customers.

At the Naira-Settled OTC foreign exchange Futures market, activity level was very low during the week as only US$10.5m worth of transactions were carried out, taking total value of open contracts to US$3.5bn on Friday. “We suspect that last week’s upward review of the contract prices may have cooled interests in the contracts”, analysts at Afrinvest said.