Naira Climbs after CBN 3x FX Sales to Banks
Nigerian naira has started gradual trending in the foreign exchange markets after the Central Bank of Nigeria (CBN) resumed FX sales to authorised dealers. The naira exchange rate appreciated by 1.9% to N1,468.99 versus Us dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM).
The moderate gain recorded came following FX sales to deposit money banks in recent past week.
The apex bank conducted FX auctions three times last week, selling $211 million, in order to stem the tide against the naira which lost more than 43% between April 17 and May 17 due to shortage of foreign currency.
The currency market requires adequate FX inflow as support, buffer for the naira to claw back losses.In the parallel market, the naira is however struggling to claw back losses due to rising demand for Us dollar and other foreign currency.
The exchange rate in the informal currency market has seen support from the apex bank. To reduce pressure from the black market, the CBN has been selling FX at a subsidised rate to cover invisible demand.
A cap of FX spread stopped excessive FX spread made on transactions by Bureau de Change operators. As part of regulatory demand, the apex bank allows currency traders in the informal market to make 1.5% on US dollar sold to FX users under the invisible classification.
The market expects the renewed FX sales to help naira to navigate the stormy weather in the official market this week. Analysts maintain that there’s no hope that the naira would sustain recent rally without FX injection into Official and informal market. Selloffs Provoke Spike in Nigerian Treasury Bills Yield
