Naira slides 22%, opens at N374/$ on investor window

The naira opened at N374 per US dollar on Tuesday, at the newly introduced Investors and Exporters (I&E) window, up 0.36 percent from a closing price of N377/$ on Monday, according to data by market regulator, FMDQ.

The currency is however down 22 percent compared to the CBN quoted official rate of N306/$.

The I&E window closed at N377.11 per US dollar on Monday, after being quoted at an opening price of N372 per dollar, according to FMDQ data.

The Central Bank said at the close of trading yesterday that the rates will be market determined, as monetary authorities look to return dollar liquidity to the market hard hit by acute dollar shortages brought on by a slide in oil revenues and lukewarm portfolio inflows.

The supply of FX at the I&E window will come from portfolio investors, exporters and authorized dealers (Deposit Money Banks), while transactions eligible to access the window will include loan repayments, interest payments, dividend/income remittances, capital repatriation, bills for collection and other eligible invisible transactions as detailed under ‘miscellaneous payments’ in the CBN’s foreign exchange manual.

Nigeria has suffered from a dearth of foreign exchange after the price of oil, its main source of revenue, collapsed. While crude prices have since risen, there is an estimated $4 billion backlog in the foreign exchange market that is yet to be cleared, traders say.

The naira has traded at around 305 per dollar on the interbank market since August. The black-market rate plummeted to a record 520 against the greenback in February, but recovered to 390 after the central bank sold $3 billion in forward contracts and on the spot market.

Three-month non-deliverable forward contracts on the naira rose 1.3 percent to 356.6 per dollar at 12:58 p.m. in Lagos, the highest on a closing basis since March 6, suggesting traders see the currency’s weakening about 12 percent in that period. Six-month contracts rose 1.5 percent to N377.5.

 

LOLADE AKINMURELE