Naira Rises To 217 Against Dollar

The naira appreciated against the United States dollar
at the parallel market on Monday to 217, from 221
recorded on Friday.

The naira rose on the back of weak demand for the
dollar at the foreign exchange markets.

Forex traders linked this to an improved dollar
liquidity occasioned by the sustained sales of the
greenback by the Central Bank of Nigeria.

Reacting to the rising fortune of the local currency,
the Acting President, Association of Bureau De
Change Operators, Alhaji Aminu Gwadabe, said, “The
market has started feeling the effect of the dollar
sales by the central bank in the last two weeks and
tight measures introduced to prevent cross boarder
currency trafficking.”

The CBN had increased the frequency of dollar sales
to the BDC operators two weeks ago to twice-weekly
from the usual once a week previously in a move
meant to increase liquidity in the market and support
the local currency.

Traders said bank customers were no longer willing
to hold dollars after the central bank banned dollar
cash deposits into domiciliary accounts.

“We expect to see more rallies in the market if the
central bank could sustain its support for the naira,”
Harrison Owoh, a bureau de change operator said,
Reuters reported.

The naira was unchanged at the official interbank
market at 197 to the dollar, where the CBN has
maintained a tight control by pegging it to the rate of
197 to the dollar
The naira had weakened on the parallel market to as
much as 245 to the dollar last month, on persistent
dollar demand after central bank limited importers’
access to dollars on the official interbank market to
buy a wide range of goods, in order to save the
external reserves.

The local currency later rebounded to 216 at the
parallel market as Deposit Money Banks started
rejecting cash deposits in dollars a few weeks ago.

The naira had, however, weakened to about 223 last
week before rising to 217 on Monday
Analysts expect the naira to continue rising, saying it
is good for the economy.

The Head, Investment and Research, Afrinvest West
Africa, Mr. Ayodeji Ebo, had said that the gains made
by the naira was good for the economy, adding that it
would help the CBN to gauge the true value of the
currency in the event of a possible devaluation in the
near future.

“If there is a convergence between the interbank and
parallel market, the CBN may possibly review its
restrictions imposed on the forex market,” he added.

A currency analyst at Ecobank Nigeria, Mr. Kunle
Ezun, said if the trend continued, the naira might rise
to as much as 200 against the dollar.

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