The nation’s currency, the naira, on Tuesday gained N0.43k or 0.2 percent over the US dollar at the inter-bank market after the Central Bank of Nigeria (CBN) adjusted the value of the currency, BusinessDay has learnt.
After trading on Tuesday, naira closed at N198.45k/$ as against N198.88k/$ traded the previous day at the inter- bank market, data from Financial Markets Dealers Quotations (FMDQ) revealed.
At the official, parallel markets, and bureau de change segment, the local currency remained stable at N168/$ and N213/$ and N211/$, respectively. BusinessDay gathered that the CBN may have spent about $570 million in three days defending the naira at the inter-bank foreign exchange market with a renewed effort at shoring up the local currency and conserving the external reserves.
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External reserves fell to $32.66 billion by February 16, down 1.2 percent from $33.04 billion by February 13. Foreign reserves have fallen by 5.3 percent from a month ago. The apex bank had on Friday last week, Monday and Tuesday intervened specially at the inter-bank market by selling dollar to dealers at N198/$, which goes beyond the official band, to clam the demand pressure in the market.
Meanwhile, the CBN on Monday and Tuesday directed deposit money banks to submit their demand levels so as to ensure genuine demand and supply dollar accordingly. Some analysts believe that selling dollar out of the official band implies indirect devaluation of the currency. But Bismarck Rewane, managing director/chief executive officer, Financial Derivatives Company Limited (FDC), said it is not official naira devaluation but adjustment of currency values. He explained in a text message that devaluation will mean shifting the mid- point from N168 at the Re- tail Dutch Auction System (RDAS).
Ayodeji Ebo, head, investment research, Afrinvest, who spoke with BusinessDay, last night on phone, said this shows that naira has been indirectly devalued, adding that the CBN’s request for banks to present their demand levels shows that the apex bank is determined to defend the naira at the expense of its implication on foreign reserves.
