In its bid to preserve the value of the naira, the Central Bank of Nigeria (CBN) last week, jacked up the amount of foreign exchange offered to authorised dealers through the official window of the Wholesale Dutch Auction System (WDAS).
Available data indicate that the apex bank sold a total of $270 million during the two sessions held last week, as against the $230.5 million sold the previous week, indicating an increase of $39.5 million or 17.13 per cent.
The increase notwithstanding, the naira weakened marginally against the U.S dollar at the official window, closing the week at N155.69 to the dollar compared with N155.65 to the dollar the previous week.
Meanwhile, data from the CBN website indicated that the apex bank reduced by 20 per cent the amount offered at its regulated WDAS to $1.080 billion in April 2012. The amount reflected a reduction by $270 million, over a total of $1.350 billion offered the previous month.
Just like the previous months, the CBN did not publish the amount of dollars demanded by dealers throughout the eight auctions held in April.
In the month under review, available data showed that out of the eight sessions observed at the bi-weekly auction, while the liquidity management office offered $150 million to dealers at four separate auctions, it also offered $120 million to market participants at four sessions.
The naira fluctuated around the N155 to a dollar bank in April. The highest value it attained in the month under review was the N155.65 to a dollar it stood on April 25, while it lowest value in the month was N155.90 to a dollar.
Experts said that the drop in the demand for the greenback would continue to reflect positively on Nigeria’s external reserves.
The forex reserves maintained an upward trend throughout April as it improved by $770 million to $36.520 billion on April 27, as against the $35.750 billion it was on April 2.
The gains recorded by the reserves were attributed partly, to rising dollar inflow from offshore investors in the Nigerian treasury bills market and also dollar sales by multinational oil companies.
FSDH Securities Limited also attributed the performance of the local currency to the increase in the forex earnings as a result of rise in oil price and oil output, reduced dollar demand from oil marketers following the probe of the oil importers, “the increase of the forex reserves which increased the ability of the CBN to defend the naira and maintain a stable exchange rate as well as the continued focus by the CBN on maintaining a managed float of +/- 3 per cent band limit.”
Emerging Markets Strategist, Standard Bank Plc, Samir Gadio, had urged the CBN to maintain its tight monetary stance and continue to mop up excess liquidity, “especially in the aftermath of the activities of the federation account allocations, to contain forex demand.”
In the first quarter this year, the total volume of the dollar offered by the apex bank at the WDAS also fell by 44 per cent to $5.300 billion.
It had revealed a reduction by $4.24 billion, compared with the $9.54 billion sold by the apex bank at the WDAS in the fourth quarter of 2011. In the first quarter, a total of 24 auctions were held.