Naira falls against dollar despite CBN’s $394.6m forex auction

The naira yesterday weakened against the US dollar losing N0.07k at the inter-bank market despite the intervention of the Central Bank of Nigeria (CBN) at the Retail Dutch Auction Sys¬tem (RDAS) window.

The CBN yesterday of¬fered a total of $400 mil¬lion but sold a total of $394.6 million to 20 deposit money banks at the rate of N155.74/$ at the RDAS window.

Consequently, it closed at N164.90/$ as against N164.83/$ the previous day, data from Financial Market Dealers Quotations (FMDQ) have revealed.

The naira has dropped 2.8 percent against the dollar on the inter-bank market since this year. Analysts had said that the naira pressure would continue following the decision of the Mon¬etary Policy Committee (MPC) to retain the Mon¬etary Policy Rate (MPR) at12 percent, and cash reserve ratio on public sector funds at 75 percent, while raising the CRR on private sector deposits to 15 percent.

Meanwhile, the external reserves have declined 13 percent this year to $37.8 billion as at March 25, 2014 from $37.9 billion on March 24, 2014.

Godwin Emefiele, CBN governor designate, who has been screened and confirmed by the Senate indicated that the CBN’s exchange rate policy was correct and that a devaluation of the NGN would be devastating for the import-dependent economy.

This, according to Samir Gadio, emerging markets strategist with Standard Bank, London, is a positive and important statement suggesting that the new gov¬ernor will not depart from the CBN’s USD/NGN stability stance implemented over the past few years. Besides, Eme¬fiele also added that he would take the necessary measures to support the NGN which has remained under pressure in recent months.