A plan by the Central Bank of Nigeria (CBN) to pump more dollars into the interbank foreign exchange (forex) market may shore up the value of the Naira against the dollar.
The Naira appreciated marginally on all trading sessions at the interbank market, opening last week at N305.80/$1 and settling at N305.70/$1 at the end of the week.
But the Nigerian Autonomous Foreign Exchange Rate Fixing rate published on the FMDQ website depreciated marginally last week, opening at N376.54/$1 on Tuesday and closing at N377.95/$1 on Friday.
At the parallel market, the Naira/dollar exchange rate remained at N391/$1 on all trading sessions.
The CBN has been injecting dollars into the market to stabilise the local currency against the greenback. The apex bank supplied total of $1.2 billion in April into the interbank market, with the intervention frequency of two to three times per week.
Also, the cumulative forex supply since February 20 remained at $3.61 billion, compared to $5.83 billion sold in January to April 2016.
There were strong indications at the weekend that the CBN plans to inject more forex through intervention segments of the market thereby heightening expectations that the naira will appreciate significantly during the week.
The expectations became rife following the inability of the authorised dealers to fully subscribe to various amounts offered by the apex bank on two consecutive times last week. Both events sent jitters to currency speculators perceiving dollar glut as imminent in the market.
Laying credence to this development, CBN’s spokesman, Isaac Okorafor, confirmed the anticipated interventions in most segments of the market during the week, with effect from today.
According to him, the Bureaux De Change (BDC) and the Small and Medium Scale Enterprises (SMEs) along with other major segments will also receive adequate intervention with a view to providing liquidity in the entire forex market.
Also at the weekend, manufacturers praised the CBN over the forex management strategy adopted recently.
The Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadiri, was quoted as saying that “the recent pronouncement of the CBN comes as a relief. If the intervention is sustained, there’s no doubt that we will have continued improvement in sourcing raw materials.”
Also speaking, the Chairman of the United Bank for Africa (UBA) Tony Elumelu, also lauded the forex regime, noting that “the recent CNB policy initiatives, under the watch of Godwin Emefiele, has restored predictability, improved market confidence and significantly added a boost to the value of the national currency, fueling optimism that the economy would soon rebound from recession.”
Analysts put Nigeria’s oil revenue estimate at a monthly value of $2.5 billion. Yet, the market forex demand hovers around $4.8 billion monthly.