Naira stabilises at N358/dollar as CBN injects $341.75m, CNY14.7m

The naira-dollar exchange rate stability at the foreign exchange market remained strong on Friday as the Central Bank of Nigeria (CBN) intervened in the Retail Secondary Market Intervention Sales (SMIS) to the tune of $341.75 million in addition to CNY14.7 million in the spot and short-tenored forwards segment of the inter-bank foreign market.

Naira traded at the rate of N358 per dollar at the Bureau De Change (BDC) segment of the foreign exchange and the parallel market.

The dollar intervention was for requests in the agricultural and raw materials sectors. The Chinese Yuan, on the other hand, was for Renminbi-denominated Letters of Credit.

Isaac Okorafor, CBN director in charge of corporate communications department, reiterated that the market continued to enjoy stability because of the regular interventions by the bank.

He also noted that the demand management approach introduced by the bank had yielded positive results, adding that the CBN management would remain committed to ensuring that all the sectors of the forex market continue to enjoy access to the needed foreign exchange.

It will be recalled that the Bank on Tuesday, November 12, offered authorised dealers in the wholesale segment of the market the sum of $100 million, while the Small and Medium Enterprises (SMEs) and the invisibles segments each received the sum of $55 million.

At the money market, the overnight rate, which is the rate at which Deposit Money Banks (DMBs) borrow and lend to each other, increased by 6.29 percent to close at 14.07 percent.

Also, the Open Buy Back (OBB) rate, the money market instrument used to raise short-term capital, increased by 6.36 percent to close at 13.07 percent.

Nigerian firms expect the naira to appreciate in the current month, next month and next 12 months as their confidence indices stood at 23.8, 36.7 and 49.5 index points, respectively, CBN’s business expectation report for the month of October indicated.

Foreign exchange inflow and outflow through the CBN amounted to US$11.69 billion and US$15.30 billion, respectively, resulting in a net outflow of US$3.61 billion, according to CBN’s economic report for third quarter of 2019.

Foreign exchange sales by the CBN to authorised dealers amounted to US$10.11 billion in the third quarter of 2019. The average exchange rate of the naira vis-à-vis the US dollar appreciated by 0.01 percent and 0.12 percent to N306.93/US$ and N359.557/US$ at the inter-bank and the BDC segments, respectively. It, however, depreciated by 0.4 percent to N362.20/US$ at the “Investors” and “Exporters” (I&E) Window. At US$40.90 billion, the gross external reserves fell by 8.6 percent below the level at end-June 2019.

The report showed that aggregate sectoral foreign exchange utilisation in the third quarter of 2019 stood at US$13.26 billion, indicating an increase of 50.9 percent and 10.8 percent above the levels at the end of the second quarter of 2019 and the corresponding period of 2018, respectively.

The invisible sector accounted for the bulk (69.5 pewrcent) of total foreign exchange disbursed in the review quarter, followed by the industrial sector (13.1 percent). Others were manufactured products 6.2 percent; minerals and oil 4.9 percent; food products 4.5 percent; transport 1.1 percent; and agricultural sector 0.7 percent.