CBN resumes dollar sales to banks left out of Tuesday auction

…Sells $100m

The Central Bank of Nigeria (CBN) on Thursday sold a little over $100 million to the banks that did not get the greenback at its first dollar auction in five months on Tuesday, sources familiar with the matter told BusinessDay.

“The rate was around N1475 per US dollar and between $2 million and $5 million was sold to each bank,” the source said.

The naira gained by 0.3 percent to N1498/$ in the official market on Thursday, according to data from FMDQ Securities Exchange, which calculates the rate.

The currency however fell to a record low of N1,600 per US dollar, according to data obtained from multiple traders, as dollar shortages persist on the parallel market, commonly referred to as black market.

The naira depreciation in the parallel market followed a strong demand for dollars by speculators, as well as individuals travelling for business, tourism, education and health, according to currency dealers.

The gap between the official and parallel market seems to be widening again despite the CBN’s best efforts to tame the gap. The gap, which had narrowed to under 2 percent only last week, jumped to 6 percent on Thursday.

The CBN resumed dollar sales to banks on Tuesday after a five-month break in its latest attempt to boost liquidity in the official market and stabilise the embattled naira.

The apex bank sold $86 million on Tuesday at N1490 per dollar, with more than half of the 34 banks that bid securing between $2 and $5 million.

The latest interventions by the CBN, however, pale in comparison to the average of $25 million it sold daily in the market last year.