Naira on Tuesday gained N9 against the dollar after the Central Bank of Nigeria (CBN) sold a total of $313.5 million to Bureau De Change (BDC) operators.
The naira, which depreciated to N400 per dollar on Monday, regained strength by 2.25 percent to close at N391 per dollar yesterday at the parallel market.
Investigation shows that during the trading day, naira was quoted at N395 per dollar at Festac area of Lagos State and N396 at Apapa.
“The naira has gained strength from an average of N398 per dollar to N391/$ this evening (Tuesday),” Aminu Gwadabe, acting president, Association of Bureau De Change Operators of Nigeria (ABCON), told BusinessDay.
He said about 3,135 BDCs nationwide got $10,000 each from the CBN at the rate of N360 per dollar and to resell to end users at the rate of N362 per dollar.
The CBN had reviewed the weekly dollar allocation to BDCs to $10,000 only on Tuesdays from $8,000 per week previously sold by International Money Transfer Operators (IMTOs).
At the interbank spot market, the local currency appreciated marginally to N306.25 per dollar on Tuesday from N306.30 quoted the previous day, according to data from the FMDQ.
The CBN was said to have offered dollar forwards to be delivered within two months to offset a backlog of matured foreign exchange obligations to manufacturers, airlines, fuel importers and agriculture businesses.
The CBN had on Monday injected a total of $240 million in the foreign exchange market and released the sum of $90 million to meet requests for invisibles such as BTA/PTA, medical and school fees. The bank also on the same day, offered a total of $150 million to authorise forex dealers in the interbank wholesale auction window.
Six weeks ago, the CBN commenced the injection of dollar into foreign exchange market and this has resulted in convergence of the interbank and parallel rates, which analysts at Renaissance Capital think is a precursor to devaluation to N350-390 per dollar. The CBN’s fixation with a stable foreign exchange rate implies it will need to sustain its forex injections to contain the parallel market premium.
“We estimate foreign reserves begin to fall when the CBN’s quarterly injections exceed $3.7 billion,” Yvonne Mhango, head of research, Sub-Saharan Africa/economist at Renaissance Capital, said in a note to BusinessDay.
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