Naira gradually regaining strength, as demand for forex maintains decline

The continued decline in the volume of foreign exchange supplied to the retail market indicates that the naira is gradually strengthening against other international currencies, the Central Bank of Nigeria, CBN, said on Wednesday.

For some time, authorized forex dealers have not been able to clear the amount of dollars supplied by the bank as part of its intervention to boost liquidity in the market.

On Wednesday, out of about $100 million offered by the Central Bank at the inter-bank wholesale transactions, only about $65.94 million was absorbed at close of business.

Last week, dealers were equally unable to take up fully the $150 million offered by the CBN on Monday, as only about $96.37 million was subscribe to.

Equally, on the day the bank opened the new ‘investors/exporters’ forex window, only $25 million was sold to interested customers.

On Monday, the Central Bank supplied a total of $150 million to the interbank wholesale market for auction to authorised foreign exchange dealers.

In spite of the decline in demand, the bank still offered another $150 million to be auctioned at the wholesale window of the inter-bank market to customers.

The CBN spokesperson, Isaac Okorafor said with this development, forex market watchers said the value of the Naira was sure to strengthen against other international currencies, particularly the dollar and pound.

The Naira exchanged at an average of N385 to the dollar on Wednesday.

“There is no cause for alarm,” Mr. Okorafor said. “The development only proves that there is enough to meet the legitimate needs of genuine customers in the market.”

To sustain the supply of forex to the market, Mr. Okorafor said the CBN had received requests from authorised dealers on behalf of their customers for the bank’s intervention in the retail segment of the market.

He, however, pointed out that the Central Bank would continue to intervene with the supply of $20,000 to dealers in the Bureau de Change (BDC) segment this week.

The CBN, he said, was nearing its goal of rate convergence between the inter-bank and the Bureau de Change (BDCs).

He said the Central Bank governor, Godwin Emefiele, had assured that the bank would sustain the current level of interventions in all segments of the market.

On the banks barred from participating in the Small and Medium Enterprises, SMEs forex window in the market, Mr. Okorafor said the CBN would ease the suspension immediately any of the erring banks displayed evidence of significant utilization of the fund allocated to them under the targeted SME window.