By: Rufus Adeyemo
The naira has been gaining steadily
against the U.S dollar in three days of trading at the parallel market.
The dollar sold for N510 on Tuesday,
dropping to N505 Wednesday and fell to about N470 at the end of trading
yesterday as more people trooped to the market to sell their foreign currency.
The Central Bank of Nigeria (CBN)
Monday changed its rules in the supply of the foreign exchange (Forex) where it
guaranteed currency supply to both small and big users.
On Tuesday about $500 million was
released through the interbank market where the 23 banks bought $371m.
The naira also gained against other
currencies such as the Pound sterling which traded at 645 a day earlier but
slipped to 610 while the Euro came down from N537 to N507 at the end of trading
yesterday.
Traders at Zone 4, Abuja, Lagos and
Port Harcourt attributed the firming up of the naira to the new policy
introduced by CBN.
Mr. Mohammed Salisu, a trader in
zone 4 said “buyers are skeptical while sellers are rushing to sell giving room
for high speculations in the market even though the BDCs have not started
receiving supply from the CBN as promised.”
Naira gains direct impact of
CBN policy – Experts
Analysts have attributed the
continuous appreciation of the naira against the dollar to the new foreign
exchange measures announced by the CBN which has seen increased supply of the
dollar to the market.
The Head, Investor Relations at
United Bank for Africa (UBA) Abiola Razaq said the policy has actually shifted
a lot of demand from the parallel market to the interbank market.
“We are very spot-on that the CBN
policy has a direct impact on the appreciation of the naira that we have seen
from about N520 back to about N500 as we speak in the parallel market,” Razaq
said from Lagos.
The CBN also during the week began
moves to fund commercial banks with additional Forex to carter for school fees,
medicals and personal travelling allowance (PTA) and Business Travel Allowance
(BTA) at a special rate.
Razaq said the PTA and BTA which
formed significant proportion of demand in the parallel market, “has reduced to
the extent that CBN has been able to provide dollars to be able to meet those
categories of demand at the interbank market and the banking system.”
He added that the intervention by
the CBN within the week to the banks and yesterday “wherein they (CBN) offered
about $230 million”, has “created more confidence in the naira and doused
speculation on the naira coupled with the fact that a lot of the demand that
you would have seen at the parallel market are now back to the interbank
market.”
Razaq said the appreciation of the
naira against the dollar will be sustainable to the extent CBN continues to
increase the supply of dollar.
Shehu Aliyu, a trader said although
they have not receive anything yet from the CBN there are assurances that from
next week the dollar will be released.
External reserves rise
Meanwhile, the CBN’s ability to
increase supply of the dollar has been strengthened by the increase in country’s
foreign exchange (Forex) reserves.
Figures obtained from apex bank’s
website yesterday showed that Nigeria’s external reserves rose to $29.328
billion as at Tuesday after appreciating by $171 million to $29.282 billion on
Monday.
The growth in the reserves, derived
majorly from proceeds of crude oil sales represented a 0.7 percent increase
from the $29.111 billion recorded as at the close of trading last Friday.
Analysis of the CBN data showed that
the reserves have maintained a steady accretion after hitting its lowest level
of $23.897 billion in the last one year on October 19, 2016.
At the beginning of January, the
reserves surged to $26.094 billion and have so far in 2017 risen by
$3.1billion.
Though the country’s Forex reserves
have been hovering around 11-year low, the increase in inflow has maintained a
steady course since late October 2016.
Daily Trust reports that the
marginal but steady increase is indicative of the drop in militancy in the
Niger Delta, rising oil exports and prices.
Latest data released by the NNPC
showed that crude oil production inched up to 1.92mb/d in November 2016,
representing 7.77% increase compared to the previous month.
NNPC attributed the increase to the
federal government’s overtures to Niger Delta militants towards providing a
lasting peace to the crisis in the region.
Also, oil has held above $50 a
barrel since the Organization of Petroleum Exporting Countries (OPEC) and 11
other nations started trimming supply to ease a global glut.
Yesterday, the global benchmark
crude, Brent, gained 66 cents to trade at $56.84 a barrel.
With the oil market entering 2017
with prices above $50 per barrel, analysts are optimistic about high prices and
a potential continuous accretion of Nigeria’s Forext this year.
As at today the Naira is already 460 to a Dollar
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