• Friday, March 29, 2024
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BusinessDay

Naira stabilises at N465 as external reserves improve by 0.39%

Nigeria starts slowly to close huge gap between its FX rates

The pressure on the foreign exchange mellowed on Wednesday as Nigeria’s currency stabilises at N465 from its peak of N477 in August 18, 2020.

Naira stability follows an improvement in the country’s external reserves by 0.39 percent to $35.67 billion as at September 18, 2020 from $35.67 billion as of August 8, 2020, occasioned by gradual improvement in oil prices.

The price of Brent crude, which has fallen to below $20 per barrel in March 2020 is gradually recovering as it stood at $41. 88per barrel as at September 23, 2020.

The foreign exchange market has witnessed dollar shortages since early this year as a result of sharp drop in oil prices, which accounts for about 90% of the country’s foreign exchange earnings and low inflows from remittances due to the Covid-19 pandemic.

READ ALSO: Naira maintains stability after CBN sells dollars to BDCs

Investigations by BusinessDay show that while currency traders across Lagos parallel markets buy dollars from individuals at between N460 and N463, they sell at N465 to the end-users.

However, naira lost N2 as the dollar was sold at N467 on Wednesday at the Bureau De Change (BDC) segment as against N465 sold on Tuesday according to abokifx.

The Central Bank of Nigeria (CBN) is expected to sell some dollars to BDCs on Thursday as they fund their accounts today (Wednesday).

The CBN has changed the dollar purchase days for BDCs to Tuesday and Thursdays from Mondays and Wednesdays, Aminu Gwadabe, president, National Association of Bureau De Change Operators of Nigeria (ABCON) confirmed to BusinessDay.

At the Investors and Exporters (I&E) foreign exchange window, naira signalled appreciation as the market opened with an indicative rate of N386.44k on Wednesday from N386.70k on Tuesday, data from FMDQ showed.

Naira broke its stability at the I&E forex window on Tuesday, appreciating marginally by 0.05 percent as the dollar was quoted at N385.80 as against N386.00 being quoted since six days ago.

Analysts at FSDH research said most participants maintained bids between N383.00 and N392.62 per dollar. Demand pressure in the FX market remains elevated, despite the FX sale to BDCs following the resumption of international travel.

The CBN resumed dollar sales to BDCs on Monday September 7, 2020 and had supplied over $200 million to the BDCs according to BusinessDay’s forex monitor. The Apex bank sells $10,000 twice weekly to this segment of the foreign exchange market.

During its two day meeting on Monday and Tuesday, the Monetary Policy Committee (MPC) noted the resumption of sales to the BDC in a bid to improve liquidity and ease demand pressure in the foreign exchange market. Consequently, the exchange rate appreciated at all windows said Godwin Emefiele, governor of the CBN.

“The MPC observed the recent improvement in external reserves and urged the Bank to maintain its prudent allocation of foreign exchange towards balancing supply and demand,” he said.