The naira is expected to gain in the coming weeks on Friday dollar sales to authorised dealers by Central Bank of Nigeria (CBN).
The CBN intervened in the foreign exchange market by selling the sum of $122.67 million to 46 authorised dealers yesterday in its determination to promote stability and reduce market volatility in the market.
Experts say it will reduce demand pressure on the forex market by making more liquidity available, while also strengthening the naira.
“It is supposed to strengthen the naira. The naira stability is a function of demand and supply. In recent days, the naira seems to have come under pressure. This is likely to moderate the pressure,” Muda Yusuf, CEO of the Promotion of Private Enterprise, said.
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He said what is important is the consistency and sustainability of it. “We need to generate that confidence in order to prevent people from speculating against the naira. The naira stability is very important. So, I think it is a good thing that they intervened,” Yusuf further said.
Ayodele Akinwunmi, senior relationship manager, corporate banking group, FSDH Merchant Bank, said the impact on the naira will be positive.
“We expect that it will enhance the value of the naira in subsequent weeks. Supply to the market should not be one-off. It will likely lead to sustained appreciation in the value of the naira,” he said.
The naira closed the week with 0.58 loss as the dollar was quoted at N1,563.80 on Friday compared to N1,554.65 quoted on Thursday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), data from the FMDQ Securities Exchange Limited showed.
The dollar supplied by willing sellers and willing buyers declined by 63.73 percent to $126.50 million on Friday from $348.82 million recorded on Thursday.
The intraday high closed at N1,586 on Friday as against N1,590 closed on Thursday, while the intraday low printed at N1,496.46 on the same day from N1,465 on Thursday.
At the parallel market, popularly called black market, the Naira closed at N1,560, losing 0.32 percent compared to N1,565 closed on Thursday.
Nigeria’s external reserves have increased to $35.27 billion as of July 11, 2024 according to data from the CBN website.
A statement signed by Omolara Duke, CBN’s director in charge of financial markets, disclosed that of the total sales, $67,500,000.00 was sold to 27 authorised dealers, while the sum of $2.5 million was bought from one authorised dealer on July 10, 2024.
Read also: Naira loses across FX markets despite improved liquidity
The range of the bid for the July 10, 2024 sales was N1,480.0/US$-N1,500.0/US$, while the value date for the payments, going by the settlement cycle of two days (T+2), is July 12, 2024.
Similarly, on July 11, 2024, the sum of US$55.17 was sold to 19 authorised dealers at N1,540.0/US$, and no FX was purchased. The value date for the payments of the spot sale is July 15, 2024.
The statement, therefore, urged all authorised dealers to ensure that foreign exchange purchases from the CBN are used exclusively for trade-backed transactions, which should be reported within 72 hours.
While reiterating that the CBN supplies foreign exchange to the foreign exchange market to improve liquidity through FX spot sales to authorised dealers using two-way quotes, it assured that the bank will continue to ensure stability in the FX market.
