Currency experts expect the recent stability of the naira against the dollar to continue this week with the usual intervention by the Central Bank of Nigeria (CBN) in the interbank foreign exchange market as well as improving dollar supply to Bureaux De Change (BDC) operators, which would booost the local currency on both the official and parallel markets.
The naira was quoted at N456 to the dollar on the parallel market last Friday, compared with N454 to the green back the previous day, while on the CBN and FMDQ websites, it closed flat at 305.25/$ and 304.75/$ respectively.
Currency dealers point out that the naira has consistently closed around 305.5 to the dollar on the interbank market since August due to daily intervention in the market by the apex bank. Last week, the banking watchddog sold around $313 million to clear a backlog of dollar demand from airlines and other firms. It also issued a statement pledging that in the next few months it will fund the 60-day forward sales and request from the agricultural, aviation, machinery and raw materials sectors, thus guaranteeing letters of credit for importers to ship in required goods.
In the statement issued last Wednesday, the Acting Director, Corporate Communications Department, CBN, Mr. Isaac Okorafor, said the banking watchdog would fund the requests from the various sectors in the secondary interbank market, thereby boosting the importation of required goods for the overall development of the economy.
He explained that importers in the agricultural sector would be getting the largest allocation of 62 per cent of their requests, while importers of machinery would receive 53 per cent of their requests. Other sectors to receive allotments are the airlines, which will have 32 per cent of their request settled, as well as the importers of raw materials.
Similarly, in a bid to encourage Nigerians in diaspora to use official channels to remit forex back home, the CBN last week increased the exchange rate for BDCs to N385 per dollar. Prior to the development, it allowed BDCs to buy at N375 per dollar and sell at N381 per dollar.
By raising the rates to allow BDCs to buy at N381 per dollar and sell at N385 per dollar, dealers said the apex bank was helping to increase the supply of dollars on the on the parallel market. A BDC operator, Mr. Martin Ebuka, predicted that the naira would continue to strengthen on the parallel market due to the improved liquidity.
He said: “The naira/dollar exchange rate is really coming down and this is because of the improved supply of dollars to BDCs. As we approach the Christmas season when many Nigerians will return home with more dollars, the naira will rise even further.”