Naira Strengthens To N435/$ On CBN Dollar Glut

The naira continued to strengthen on the parallel market on Monday to close at N435 to the dollar, stronger than N450 to the dollar at which it closed last Friday, as the Central Bank of Nigeria (CBN) continued to relentlessly pump the greenbank into the interbank foreign exchange market to meet the demand of bank customers. But the buy rate of the greenback rose slightly to N430 to the dollar Monday, against N440 last Friday. Several parallel market operators who had been stockpiling dollars for months, were seen lamenting that the CBN’s intervention was forcing them to offload their dollars at a loss. But as they bemoaned their losses, market analysts cautioned that they were likely to incur more losses, as the CBN, in keeping with its determination to increase liquidity in the FX market Monday pumped a fresh $180 million into the interbank market. A breakdown of this amount showed that the CBN sold $100 million through its special wholesale intervention forwards and pumped an additional $80 million to the banks, specifically for school fees, medicals, and Business and Personal Travel Allowanced, among other invisible transactions. CBN also said it would with “immediate effect give Travelex $4 million weekly to satisfy demand for travel allowances at the Lagos and Abuja airports”. In a statement released Monday, the CBN’s acting Director, Corporate Communications, Mr. Isaac Okorafor, said the central bank’s commitment to providing enough FX for legitimate business remains unshaken, reiterating that it would do “everything possible” to maintain the steady supply of forex to the market. In all, the new FX measures introduced by the CBN aimed at improving liquidity in market has led to the appreciation of the naira by N85 in just one week. Analysts are projecting that the naira might appreciate to about N400 to the dollar on the parallel market this week, effectively meeting the CBN’s objective of closing the gap between interbank and parallel market rates. The CBN had maintained that much of the dollar demand was a bubble created by speculators and hoarders of the greenback. Also, speaking on a programme monitored on Raypower FM in Lagos Monday, Okorafor urged currency dealers and others hoarding dollars to make hay and sell their holdings in order to avoid heavy losses. He added: “I want to assure that we would provide enough liquidity in the market and we will sustain liquidity in the market. The country is opening up and foreign reserves are improving. Many people outside are beginning to realise the huge opportunities in this country. “You can see the subscription of the Eurobond. It clearly shows the potential in this economy. This economy is bottomless when it comes to investment opportunities. “So, ultimately, the exchange rate would improve and anybody hoarding dollars would suffer for it.” Responding to a question on the impact of the continuing ban of 41 items from accessing the official FX market, the CBN spokesman said: “The savings we have made from the elimination of the 41 items from the FX market have been very huge. “Nigerians are beginning to adapt to made-in-Nigeria products and indeed we have supported some local manufacturers. “Apart from rice, we are funding the production of palm oil and other produce. “We have two firms now producing toothpicks in Nigeria. So, you can see that even though people criticised the removal of the 41 items, which is one thing that we held on to, to change the entire economic landscape of this country. “No country is known to have succeeded or became great by depending on outsiders for its food, fashion, drinks, and others. We cannot continue like that. “We must change our appetite for foreign goods and services. We are determined to fund the FX market.” Meanwhile, Nigeria’s external reserves increased further to $29.414 billion, according to latest figures made available by the CBN.

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