The improving fortunes of the naira in the parallel market continued, Monday, as it appreciated to N435 per dollar due to declining demand for dollars.
Investigations revealed that the parallel market exchange rate, which declined to N445 per dollar last week, further dropped to N435 per dollar at the close of business, yesterday, translating to 3.4 per cent appreciation of the naira.
Naira appreciation is being driven by decline in demand for dollars occasioned by increase dollar supply by the Central Bank of Nigeria (CBN) . Confirming this, President, Association of Bureaux De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, said: “The appreciation is due to both increase in dollar supply and reduction in demand.
First is the increase in number of BDCs accessing CBN dollar sales, the second is the sustained dollar sales by CBN to banks for invisible items and the third is the fact that most of the demand in the market before the CBN began its intervention, were driven by fear of further depreciation of the naira, added to this were frivolous demand or demand for speculation. Demand for dollars for these purposes has dropped to near zero.
If the CBN continues its intervention, demand will continue to drop and the naira should further appreciate”. Meanwhile, the CBN today intervened again in the foreign exchange market by selling $180 million comprising $100 in forwards transactions to be delivered in 60 days and $80 million for invisibles such as medicals, school fees and personal travel allowances.
This increases the apex intervention to $2.26 billion. Confirming the figures, the Acting Director, Corporate Communications Department, CBN, Isaac Okorafor, said the wholesale requests will be settled on Tuesday, March 21, 2017, adding that the closing interbank rate for Monday, March 20, 2017, was N307.5/$1.
While disclosing that the Bank had so far met all the legitimate demands from genuine customers, he reiterated that the CBN would ensure sustainable forex liquidity and transparency in the process to enable as many customers as possible get access to the foreign exchange they genuinely demand.
He, therefore, advised eligible individuals with genuine foreign currency needs to freely approach their banks and authorised dealers with their request, stressing that the CBN had made adequate provisions of foreign currency for all such legitimate purposes.
Since Monday February 20, 2017, when it announced new measures to boost dollar supply and forestall the declining fortunes of the naira in the parallel market, the CBN has injected $2.26 billion by intervening in the forex market 11 times as follows: Tuesday February 21st, $417 million; Thursday February 23rd, $231 million; Monday February 27th, $180 million; Friday March 3, $350 million; Monday March 6, N367 million; Tuesday March 7, $100 million; Thursday March 9, $170 million; Tuesday March 14, $190 million; Wednesday March 14, $150 million; Thursday March 16, $100 million and Monday March 20, $143 million.