The value of the naira at the parallel market continued to decline hitting N420 to the dollar, as dollar sales by the Central Bank of Nigeria (CBN) boosted liquidity at the interbank market where the naira closed at N306 to the dollar.
At the parallel market, the naira had weakened from N407 which it closed on Friday last week, indicating a 3.2 per cent decline within three days. Traders said dollar sales by the apex bank to some banks supported the currency at the official market.
The currency closed at N306 to the dollar, reversing losses in early traded which saw it quoted at 317.09 to the dollar, but fell compared to the 305.50 naira closed the previous day. Bureaux de change operators however raised hope of a gradual appreciation of the local currency in the near term as the central bank licensed 11 new international money transfer operators to address the dollar supply side.
According to the president of the Association of Bureau de Change Operators of Nigeria (ABCON) Aminu Gwadabe, “Depending on the effective implementation of the central bank’s policy, the appointment of new international money transfer operators will ensure that banks will have more dollar to sell to bureaux de change and provide the needed liquidity in the market.”
Gwadabe said the apex bank’s directive that commercial lenders should sell dollar inflow through money transfer operators to bureaux de change has boosted daily dollar supply to the currencies agencies to around $10-$20 million and this could further boost supply and help support the naira.
The apex bank had also yesterday lifted the suspension of eight banks which it had earlier banned from the interbank market; a move which traders said may ease the pressure at the parallel market a bit.
CBN’s recent intervention at the interbank foreign exchange market also reflected on Nigeria’s foreign exchange reserves which fell to $25.45 billion as at August 29, 2016 a decline of 2.86 per cent from the previous month, according to latest data released by the apex bank.
Dollar reserves stood at $26.20 billion in end of July. The central bank data showed reserves had declined 18.9 per cent from a year ago.