Nigeria’s currency appreciated against the dollar on Tuesday as it traded at an average rate of N457.75k to the dollar on the black market, from N460 traded on Monday.
The naira appreciation is attributed to improved liquidity as the Central Bank of Nigeria (CBN) has sold over $450 million to over 5,000 Bureau De Change (BDC) operators in the last one month.
Aminu Gwadabe, president, Association of Bureau De Change Operators of Nigeria (ABCON), said there is a lot of disincentive for frivolous demand of foreign currencies in the market with the CBN’s measures aimed at regulating the market.
He said the impact of resumption of sales to BDCs, as one of the CBN measures, has helped to meet the liquidity needs of the critical retail end sector and flattening the curve.
“We expect to see further positive impact on the naira as ABCON continues to partner with the CBN,” Gwadabe told BusinessDay on Tuesday.
The CBN sells $10,000 twice weekly to the BDC segment of the foreign exchange market. The apex bank has sold over $450 million to BDCs since September 7, 2020, when it resumed dollar sells to them.
BusinessDay checks show that dollar was trading at N460 in Festac Town, N455 at Lagos airport and N458 at Apapa and Eko Hotel in Lagos on Tuesday. Traders were buying dollars from individuals at between N450 and N455 across Lagos streets where parallel market operators are operating.
However, at the BDC segment of the foreign exchange market, naira weakened by N2 as the dollar was sold at N457 on Tuesday as against N455 sold on Monday.
The foreign exchange market opened with an indicative rate of N386.42k at the Investors and Exporters (I&E) forex window on Tuesday, signalling N0.21k appreciation when compared with N386.63k opened with on Monday, data from FMDQ revealed.
Naira weakened by 0.05 percent as the dollar was quoted at N386.00 on Monday as against the last close of N385.80 on Friday.
Analysts at FSDH research said most participants maintained bids between N380.00 and N392.51 per dollar.
Nigeria’s external reserve has continued to decline as it slid by $67.58 million in September 2020. The external reserves dropped to $35.74 billion as of September 30, 2020, from $35.67 billion on August 31, 2020, which represents a decrease of 0.19 percent.
Nigeria’s treasury bills market closed on a flat note on Monday with average yield across the curve remaining unchanged at 1.85 percent. In spite of a buoyant system liquidly in the market, the NT-bills market was quiet for the second consecutive trading session, a report by FSDH research stated.
As of October 5, the Overnight (O/N) rate declined marginally by 0.02 percent to close at 1.56 percent from 1.58 percent on the previous day, and the Open Buy Back (OBB) rate also declined by 0.13 percent to close at 0.88 percent against the last close of 1.01 percent.
“We expect the money market rates to remain subdued as inflows from Open Market Operation (OMO) bills maturities worth N567.69 billion are expected to hit the system later in the week,” the analysts said.
