WDAS: Dollar Supply Reduces by 20% in April

02 May 2012

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Dollar notes

By Obinna Chima

The amount of United States dollars offered by the Central Bank of Nigeria (CBN) at its regulated Wholesale Dutch Auction System (WDAS) dropped by 20 per cent to $1.080 billion in April, THISDAY findings have shown.

Data compiled by THISDAY on Monday, showed that the amount reflected a reduction by $270 million, over a total of $1.350 billion offered by the apex bank at the official market in March.

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, THISDAY checks also revealed 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 oscillated 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 the 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, THISDAY findings also showed.

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.

Tags: Business, Nigeria, Featured, WDAS, Dollar Supply Reduces

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