• Thursday, February 29, 2024
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Naira falls again as external reserves decline to $40.40bn


The naira again yesterday eased against the US dollar losing N0.35k or 0.2 percent at the inter-bank market due to increased demand by foreign exchange users, even after oil majors sold some undisclosed amount of dollars, BusinessDay findings can reveal.

Also, external reserves on February 26, 2014 declined to $40.40 billion from $40.56 billion the previous day.

On Wednesday, naira lost 24 kobo to the dollar at the inter-bank market in spite of the Central Bank of Nigeria’s (CBN) foreign exchange auction.

At the end of trading yesterday, the local currency closed at N165.15/$ compared to N164.80 the previous day, data from Financial Markets Dealers Quotations (FMDQ) have indicated.

Some multinational oil companies sold an undisclosed amount of dollars, irrespective of this, demand continued to outweigh supply in the market, Sewa Wusu, head of research, Sterling Capital Markets Limited, said by e-mail.

The CBN on Wednesday offered a total of $400 million but sold a total of $398.7 million to 21 deposit money banks that participated in the bi-weekly Retail Dutch Auction System (RDAS) at the rate of N155.75/$.

Dealers believe CBN may move the mid-point of the currency rate higher at the next MPC coming up March 24-25 and further increase CRR to protect the reserve and possibly attract further FPI flows. However, oil theft and theft of oil money must abate, while reserves must accrete for these to be achieved on a sustainable basis, Daniel Ugwuoke, director, equities/African equity product distribution, Renaissance Capital, has said.

He said most dealers agreed with Bismark Rewane’s view that once the reserves go below $40 billion, all bets will be off – making devaluation potentially unavoidable.

Inter-bank rates at the money market yesterday dropped by 0.64 percent from 12.32 percent the previous day to 12.24 percent. This is due to maturing treasury bills worth N267.85 billion which hit the financial system yesterday.