Naira closes strong on increased dollar supply

Nigeria’s currency on Wednesday closed stronger than in the last three days as the foreign exchange daily turnover increased significantly by 690.63 percent at the Investors and Exporters (I&E) forex window.

The total transaction at the I&E window rose to $93.69 million on Thursday compare to $11.85 million recorded on Wednesday, data from the FMDQ showed.

Consequently, after trading on Thursday, naira/dollar exchange rate closed at N409.65k as against N411.00k closed on Wednesday at the I&E window.

Currency traders who participated in the trading on Thursday maintained bids at between N394.00k and N419.30k/$, according to data from the FMDQ.

Since January this year, the Central Bank of Nigeria (CBN) had not intervened in the I&E window, Godwin Emefiele, governor of the CBN said at the last Monetary Policy Committee (MPC) meeting briefing.

The market has always operated within a band of around N409/$. At some point, it attained N412 and N413 and that it is how it supposed to move, Emefiele said, adding that “the job of the CBN is to moderate the market in line with where we think exchange rate should be”.

Exchange rate remained flat at N485 at the Bureau De Change (BDC) segment of the foreign exchange market since March 16, 2021 and at the parallel market since the beginning of this month.

Over 5,000 BDCs across the country received dollar disbursement from the CBN on Thursday after funding their accounts on Wednesday. The CBN sells $10,000 twice weekly to BDCs across the country.

Foreign exchange cash sales to BDCs by the CBN stood at US$1.36 billion as at the fourth quarter of 2020, according to the CBN’s economic report.

The report noted that the rise in invisibles purchases in the fourth quarter of 2020 impacted positively on the foreign exchange flows through autonomous sources. The development was due to the rise in repatriation of export and investment proceeds, despite the resurgence of the COVID-19 pandemic and partial lockdown of some economies, especially, the U.S.A and Europe.

Aggregate inflow through autonomous sources amounted to US$15.43 billion, which accounted for 65.4 per cent of the total inflow through the economy. This represented an increase of 6.5 per cent above the level in the preceding quarter of 2020 but declined by 32.4 per cent, compared with that of the corresponding quarter of 2019. The increase in inflow was due to 8.7 per cent rise in proceeds from invisible purchases to US$14.79 billion, relative to the preceding quarter.

Invisible purchases comprised total over-the-counter (OTC) purchases and ordinary domiciliary account valued at US$10.61 billion and US$4.19 billion, respectively.