Naira depreciates to 365/dollar despite CBN interventions

The naira depreciated marginally by 0.55 percent at the parallel market week-on-week to close at N365 on Friday. The local currency had closed at 363/dollar last Friday. Currency retailers and analysts said the development came on the back of increased demand was occasioned by activities heralding the Christmas and New Year celebrations. 

This came despite the frequent interventions by the Central Bank of Nigeria. The President, Association of Bureaux De Change Operators of Nigeria, Mr. Aminu Gwadabe, said the development was part of foreign exchange market fluctuations. He said, “The spikes maybe as a result of the renewed political spending that is going to be a threat to naira stability; secondly, the differential exchange rates at the various official window is also discouraging genuine competition among operators which the parallel market always survived on.” 

The interbank window of the nation’s foreign exchange market had last Tuesday received a boost of $210m from the CBN. The interventions were made at the wholesale, the Small and Medium-scale Enterprises, and invisible segments of the market. 

The Acting Director, Corporate Communications, CBN, Mr. Isaac Okorafor, had said the bank offered the sum of $100m to the wholesale segment, while the SMEs and invisible segments received the sum of $55m each.

He reiterated that the releases were meant to boost liquidity, trade and ease of remittances for legitimate personal commitments. According to a currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, the naira will likely depreciate further this week following the suspension of the Open Market Operations by the regulator. He said, "Once you have an interest rate at this low level, traders can avoid money to buy from the foreign exchange either for Christmas goods or to speculate. 

It had started from last week when naira closed against the Dollar at N365. For me, it might get to N370 if care is not taken. The stop in OMO sales by CBN might be revised soon, and CBN might start issuing OMO to mop-up liquidity from the system." The naira also depreciated by 0.15 percent to N360.96 at the Investors and Exporter Foreign Exchange window on Friday.


Punch