The naira continued on the path of appreciation on the parallel foreign exchange (FX) market monday as it closed at N455 to the dollar, higher than the N460 to the dollar it closed last Friday.
The steady gains recorded by the nation’s currency on the unofficial segment of the market in the past few days, was once more attributed to improved dollar liquidity to the Bureau De Change (BDC) arm of the market.
THISDAY last week reported the appointment of Travelex and FirstBank Nigeria Limited as the only two institutions responsible for the sale of the greenback to BDCs, in its bid to ensure improved dollar supply to the foreign currency traders. This followed the suspension of 19 other commercial banks from same role as a result of their failure to fully comply with a directive which required commercial banks that act as agents of international money transfer operators to always sell foreign currency remittances to licensed BDC operators.
The President of the Association of Bureau De Change of Nigeria (ABCON), Alhaji Aminu Gwadabe had welcomed the move by the central bank, saying it would help strengthen the naira and improve dollar liquidity in the market.
“If you check, since Travelex started selling to BDCs, speculation has reduced in the market and the naira is on the path of recover,” Gwadabe had said.
Meanwhile, the overnight tenor of the Nigerian Interbank Offered Rates (NIBOR) soared to a record high of 128 percent on Monday on naira cash shortages after the lenders funded their account with the central bank to participate in last Friday’s currency forward auction, Reuters disclosed.
Overnight rates opened at 100 per cent on Monday, traders said, after the money market ended on Friday with no deals as commercial lenders held onto naira to be able to participate in the auction. Overnight money traded at 14 percent on Thursday.
The central bank has been tightening liquidity and intervening directly with dollar sales to commercial lenders to support the naira, hit by the fall in oil prices, Nigeria’s economic mainstay.
The bank on Friday held a two-month dollar forward auction to clear a backlog of demand from airlines, manufacturers and other companies, as the currency crisis deepened.
However, it debited customers’ naira accounts on the day of the auction but will deliver the dollars in two months’ time, traders said, adding that the move had soaked up liquidity from the money markets.
The central bank intervened again on Monday with dollar sales to support the naira, which ended at N305.50 to the dollar on the interbank FX market.