Naira gains 0.95% on increased dollar supply

The naira posted 0.95 percent gain at the official foreign exchange (FX) market following increased dollar supply on Thursday.

After trading on Thursday, the dollar was quoted at N1,566.82, an improvement from N1,581.65 quoted on Wednesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), data obtained from the FMDQ Securities Exchange Limited showed.

The dollar supplied by the willing sellers and willing buyers rose by 152.53 percent to $273.14 million on Thursday from $108.16 million recorded on Wednesday.

Read also: CBN says rise in crude oil exports will strengthen the naira

The Central Bank of Nigeria (CBN) has approved the sale of $20,000 to each eligible Bureau De Change Operator at the rate of 1,450/$ to meet the demand for invisible transactions.

According to the FX market summary released by the FMDQ, the intraday high closed at N1,650 on Thursday, higher than N1,620 closed on Wednesday. The intraday low steadied at N1,500 per dollar.

The local currency lost 1.52 percent of its value against the dollar on the parallel market also known as black market. The dollar sold for N1,640 on Thursday as against N1,615 sold for on Wednesday.

According to a circular released in Thursday, and signed by A.A Mahdi, acting director trade and exchange department, the sale was in a bid to correct “observed continuous distortions in the retail end of the market, which is feeding into the parallel end and further widening the exchange rate premium.”

Read also: The invisible hands in the fall of the naira

The circular further stated that the BDCs were only allowed to sell to eligible end-users at not more than a 1.5 percent rate higher than the purchase rate from the CBN.

All eligible BDCs are directed to make the Naira payment to the listed CBN Naira deposit account numbers and submit confirmation of payment with necessary documents for disbursement at the appropriate CBN branches,” the circular stated.

Last week, the CBN intervened in the foreign exchange market by selling the sum of $122.67 million to 46 authorised dealers to promote stability and reduce market volatility.

However, Aminu Gwadebe, the president of the Association of Bureau De Change Operators of Nigeria revealed that BDC Operators had been excluded in the latest tranche of forex sales by the CBN to authorised dealers.

“The BDC window has been suspended by the Central Bank of Nigeria since around March or so. The last time we were funded was around March,” he stated in an earlier interview.