Naira Strengthens to N1537 after CBN Sells $40m to Banks
The naira strengthened to N1,537 per US dollar in the official foreign exchange market on Tuesday after the Central Bank of Nigeria’s (CBN) FX intervention sales to authrosied dealer banks.
A slew of analysts have projected that the exchange rate would stabilise further due to the authority’s fast, furious yet steady FX auctions to authorised dealers. To keep exchange rates stabilised across the currency market, the CBN also offered a lifeline to the Bureau de Change to buy US dollars from banks at the official rate.
The temporary FX sales to parallel market operators are to ease year-end demand and reduce speculative tendency. On that note, the exchange rate appreciated by N15 to settle at N1,640 per greenback in the parallel market yesterday.
Analysts said the spread between the two markets narrowed by 91 basis points to 6.70%, from 7.61%. The CBN sold $40 million between the rates of N1,532 and N1,541 to authorised local banks on Monday.
The FX sales followed a whole week of aggressive FX supply in the previous week. For December, FX auction sales have been consistent, more than ever. Analysts attribute this development to the CBN year-end target amidst rising external reserves.
Analysts said at MarketForces Africa economic forum that the external reserves level provides a strong buffer for the CBN to stabilise the naira. They cited that increased transparency at the automated FX trading platform has continued to drive inflows into Nigeria.
Gross balance in Nigeria’s foreign reserves climbed to $40.848 billion on Monday, reflecting improved foreign investors’ confidence. #Naira Strengthens to N1537 after CBN Sells $40m to Banks Naira Mixed as CBN Turns Aggressive with FX Interventions
