Market News
Naira recovers against dollar, other currencies - BLUEPRINT
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The naira recovered from the dollar and other foreign currency demand invasions last week in the official window, with moderate heat coming from the parallel market.
The intermittent recovery has been partly supported by forex sales to banks and other authorised forex dealers. That has not been able to keep the local currency strong as the Central Bank of Nigeria (CBN) maintains forex intervention on a lower scale.
According to MarketForces Africa, the scary demand at the August retail Dutch forec auction has caused the CBN to retrace steps.
“This country cannot survive with $1.1 billion forex sales as seen at the last Dutch Auction System sales – which may be the last as the CBN has already retraced without mentioning the next step”, an expert said in a chat with MarketForces Africa.
The CBN has been selling US dollars to banks while scarcity lingers at the parallel market for invisible transactions. This spillover of the US dollar shortage filtered into the official window and caused the naira to run amok in the past few weeks.
“There is a bleak future for the naira. First, forex policy has been inconsistent. It is not really clear if the naira has finally settled. It appears the CBN conducts forex sales only when naira is above N1600 benchmark.
“Surprisingly, the CBN also sold forex to banks at N1630 – suggesting that the authority is now comfortable at that range even with the sustained increase in gross external reserves”, Broadstreet analysts said at MarketForces Africa Analysts Forum on Friday.
The Naira appreciated by 0.52 per cent per cent closing at N1,666.72 per US dollar at the official market. In the Parallel market, the Naira closed at N1,730 to the dollar.
Data from the official trading platform of the FMDQ Exchange, a platform that oversees the Nigerian Autonomous Foreign Exchange Market (NAFEM), revealed that Naira gained N8.77 compared to the previous trading on Thursday, when it exchanged at N1,675.49 to a dollar.
