Naira Gains as CBN Adjust Rate, Unsuccessful FX Bids Rise
The naira swung positively against the United States (US) dollar on Thursday after the apex bank allowed a moderate, intermittent exchange rate devaluation with increasing unsuccessful bids at FX auctions.
At the official window, the exchange rate worsened to N466 per United States dollar, before it printed lower at N462.73 at the investors, exporters window amidst the monetary authority market intervention influence. Even at that, most FX demand did not clear.
Analysts said the apex bank has continued to refund bids as it seeks to balance the demand and supply side equation to maintain a reasonable foreign reserves balance covering about 10 months of imports.
The Central Bank of Nigeria (CBN) weakened the local currency on the spot market and at its foreign exchange auction midweek, according to authorise FX dealers.
MarketForces Africa gathered that the apex lender in the country is making moves to settle the FX demand backlog at the foreign exchange auction, which appears to trigger a decision to allow a marginal naira devaluation this week.
On Wednesday, CBN allowed the FX rate to slide to N465 from N460 per dollar on the spot market, according to a market report. Forex traders said the apex bank sold hard currency to businesses for raw materials and other imports at N630 at its last auction on Friday.
Naira however reclaimed value to trade at N463 per dollar on the official market on Thursday. In the parallel market, the exchange rate worsened to N748 against the US dollar.
“The apex bank has been returning bids from its auction due to higher demands while FX inflow has triggered supply-side pressures”, Broadstreet investment analysts told MarketForces Africa.
At the close of business, Nigeria’s external reserve cleared lower to $35.22 billion, while oil prices stayed on a recovery course. Market data showed that Brent and Bonny closed at $74.5 and $77.4 per barrel. #Naira Gains as CBN Adjust Rate, Unsuccessful FX Bids Rise
