The Central Bank of Nigeria’s (CBN) supply of $300 million at the bi-weekly Retail Dutch Auction (RDAS) could not lift the nation’s currency as the naira continued its falling spree with 85k loss to the US dollar at the inter-bank market.
After trading on Wednesday, the local currency closed at N174.15 against N173.30 on Tuesday, compounding the volatility in the foreign exchange market.
The CBN on Wednesday offered a total of $300 million but only $114 million was sold to some banks at the Retail Dutch Auction System (RDAS).
The apex bank has spent billions of dollars defending the naira, hit by falling global oil prices, in the past month. But despite repeated interventions, the naira closed at a new low of N174.15 on Wednesday.
A report by Reuters revealed that the apex bank asked lenders to bid for $2 million each in a move to shore up the local currency, but commercial banks avoided the forex auction as the central bank was restricting the re-sale margins to curb speculation.
Meanwhile, Nigeria’s foreign exchange reserves fell 3 percent in two weeks to $37.59 billion by November 13, as the central bank stepped up support for the ailing naira currency.
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Data published by the central bank on Monday showed the reserves were at $38.76 billion on October 29.
Analysts had said the pressure on naira would continue this week on the back of increased dollar demand by exiting foreign portfolio managers and persistent decline in international crude oil price.
According to a report by Cowry Asset Management Limited, the persistent decline in the international crude oil prices continued to mount negative pressure on Nigeria’s revenue during the week under review. As at November 12, 2014, the reference basket price of the Organisation for Petroleum Exporting Countries (OPEC) plunged to USD76.96 per barrel which is USD0.54 lower than the Nigerian 2014 budget benchmark of USD77.5 per dollar and USD1.04 lower than the 2015 fiscal benchmark.
