Naira sustains gains, exchanges at 380/dollar

Naira closes at 380/dollar as forex supply rises
Oyetunji Abioye

The naira rose to 380 per United States dollar on the parallel market on Thursday , up from 390 it closed on Wednesday .

This came hours before the Central Bank of Nigeria sold $ 20 , 000 each to Bureau De Change operators . The CBN had sold $ 20 , 000 to each of the BDCs earlier this week to boost liquidity .

The central bank sold its usual $ 1 . 5 m on the spot market on Thursday at 305 . 50 per dollar , according to Thomson Reuters data.

According to analysts , the CBN has sold around $ 4 bn since it started its aggressive intervention on the forex market in February.

Analysts , however , doubted whether the CBN could sustain the trend .

“ Until we see a freely traded naira a la Egypt , Nigeria is fighting with one hand tied behind its back , ” the Head of Nairobi- based Rich Management , Aly – Khan Satchu, told Reuters .

The central bank has been intervening on the official market to try to narrow the currency ’ s spread with the black market rate. On the official market , the currency was quoted at 306 per dollar on Thursday .

The spread has become far narrower , thanks to the central bank intervention . The naira was 520 / dollar on the black market in February after the apex bank devalued the naira for retail customers to 375 .

The Minister of Finance, Mrs . Kemi Adeosun , said liquidity was improving on the currency markets on dollar injection , thanks to rising oil prices , adding that government was harmonising fiscal, monetary and trade policies to boost growth .

“ Higher oil prices alone are insufficient to explain the central bank’ s aggressive interventions over the past few weeks and ( oil) production seems to have ramped up slowly over the first quarter of this year , ” a senior economist at the NKC in Johannesburg, Cobus de Hart , said .

He said , “ Whether the central bank used funding such as external debt -related inflows to intervene in the forex market remains to be seen, but in general , we are not convinced that the regulator will be able to sustain this trend indefinitely . ”

The President , Association of Bureau De Change Operators , Aminu Gwadabe , said the increase in currency sales to the BDCs would help take out pressure from the black market , adding that some importers were no longer bringing forward dollar demand as liquidity continued to improve .
Source: The Punch

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