The naira on Monday strengthened against the dollar at the interbank foreign exchange market after the Central Bank of Nigeria (CBN) adjusted its clearing rate to N196.97/$ from N197/$.
Consequently, naira yesterday gained N1.12k or 0.56k percent against the dollar to close at N197.37k/$ compared with N198.49k/$ on Friday at the interbank foreign exchange market.
The local currency closed stable at the Bureau de Change (BDC) segment of the forex market and the parallel market, closing at N224/$ and N225/$, respectively.
Traders said the regulator had announced the change in currency peg via a message, making this the 10thadjustment since the bank introduced tight currency controls in February.
“The central bank sent a broadcast today advising 195.97/196.97 as buying and selling rate on the interbank market at its intervention session,” one dealer told Reuters.
Currency dealers said a unit of French Total had sold $90 million to some lenders at the interbank market, but the effect was minimal as the exchange rate remained fixed. Banks are allowed to buy dollars from local units of oil firms at a margin of N2 above the fixed rate.
The central bank has resisted calls to further devalue the naira in the face of a plunge in vital oil revenues. It devalued the currency last November and later pegged the exchange rate in another de facto devaluation.
But the bank has continued to intervene at the interbank market periodically to provide forex liquidity support for the local currency. It also sells dollars twice weekly to bureau de change operators as part of efforts to support the naira and narrow the gap between the official and parallel foreign exchange markets.
