Naira Exchange Rates Reset as CBN Steps into FX Markets
The naira fired up momentum against the dominant US dollar across the forex market as the Central Bank of Nigeria (CBN) stepped into the ring. In a latest move, the apex bank is buying the naira, selling the US dollar to reset exchange rates across the informal, and official windows.
For months, the apex bank had left the exchange rates across local forex market to the forces of demand and supply. Unfortunately, foreign currency demand has continued to eclipse total volume of US dollars available for transactions in the official, and parallel markets.
This caused exchange rates to run amok, clipping near N1580 in the parallel market, and official markets alike. Following FX sales to authorised dealers and Bureau de Change operators in the official markets, the hope that the local currency will recalibrate improved.
The Central Bank of Nigeria (CBN) has begun massive FX market intervention, selling US dollars to authorised dealers, and bureau de change operators on Thursday.
The apex bank, in an effort to defend the naira from free falling, conducted market wide FX intervention as relative lower exchange rates at the informal and official market.
MarketForces Africa gathered that the apex bank sold $13.5 billion at N1510- N1530 per US dollar to banks and other authorised dealers. In the same vein, the CBN sold $20,000 to each of the BDCs at N1450.00.
The action boosted forex market confidence, causing exchange rates to improve across board. In the official market, the naira closed at N1,566.82 per dollar, a 0.94% appreciation in exchange from the previous FX quote on Wednesday, according to data from the FMDQ platform.
In the parallel market, the naira appreciated, ending the day at an average of N1,590 per US dollar from N1600. Data from the CBN website showed that gross external reserves remained intact, settling at $35.772 billion on Thursday.
In the global commodity market, oil prices steadied after trading higher. Thus, the WTI crude futures fluctuated around $82.5 per barrel on Thursday, the biggest daily gain in over a month while the Brent Crude traded at $84.6 per barrel.
Crude oil prices are expected to maintain uptrend this week as EIA data showed US crude stocks fell by 4.87 million barrels to the lowest since February, surpassing forecasts of a 0.8-million-barrel drop. This is the third consecutive weekly decline, the longest stretch of stockpile reductions since September
Naira exchange rate weakness is now seen as problematic, with companies recording huge FX losses and the economy heavily reliant on imports of goods and other services not readily available in the country. #Naira Exchange Rates Reset as CBN Steps into FX Markets
