Naira drops to 390/dollar, CBN sells fresh $246m

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The naira reversed some of the gains it recorded last week, closing at 390 against the United States dollar on the parallel market on Monday.

The local currency had closed at 380/dollar on Friday.

The naira has been hovering between 380/dollar and 410/dollar in the past two weeks as the Central Bank of Nigeria continues to intervene in the foreign exchange market to stabilise the exchange rate.

The interventions are aimed at narrowing the spread between the official and black market rates of the naira against the dollar.

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The CBN has sold around $4bn since intervention began in February, according to analysts.

After touching an all-time-low of 520/dollar in February, the CBN had increased forex supply into the market to enhance the naira.

As a result, the naira appreciated to 375/dollar in March. However, following some speculative activities and other market dynamics, the local currency fell to 410/dollar two weeks ago.

Last week, the naira reversed the loss and rose to 380/dollar after the CBN increased forex supply.

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Meanwhile, the CBN offered the sum of $246.2m to authorised dealers at the forex auction in the interbank wholesale window, the Small and Medium-scale Enterprises and invisibles’ segments on Monday.

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A breakdown of the total offer indicates that the sum of $150m was auctioned at the wholesale window while the SMEs and invisibles got $52m and $44.2m, respectively.

The bank’s spokesman, Mr. Isaac Okorafor, confirmed the offer and sales, stating that the forwards sales would be concluded in the days to come.

He, however, added that the CBN would continue its weekly sale to dealers in the Bureau de Change segment this week in order to guarantee onward sale to end users.

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He said, “The SME operators no longer have to patronise or source foreign through unofficial windows and no more pressure on either the BDCs or any other unofficial source with the opening of the special window.”

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