Naira sustains trading week gains at forex segments

The Nigerian currency, Naira over the weekend sustained gained strength against the US Dollar at all the foreign exchange markets, including the official and the parallel market.

The local currency closed at N366 per dollar, the same rate it traded on Thursday, which was a better rate compare to 367 sold on Wednesday at the parallel market.

Naira also remained unchanged at N470 against Pound Sterling and N420 against Euro at the unofficial market.

At the official segment of the market, Naira steadied at 305.80 to a dollar on Friday when it closed for the trading week. Although, unchanged, while compared to the closing rate a day before but represented a decline of 0.15 per cent against rebounded rate of 305.35 traded within the week under review.

The local currency, which had depreciated to 367.60 earlier in the week at the Nigeria Autonomous Foreign Exchange Market (NAFEX) window, otherwise known as the Investors and Exporters FX window, extended its gains by 0.08 per cent at the close of trading on Friday.

The Investors and Exporters FX window, opened at depreciated rate of 365.43 against 365.13 opened to a dollar on Thursday but closed at 366.37 compare to 366.67 did in the previous day, represented an increase of 0.08 per cent.

The local currency, at NAFEX, had traded at N362.21 per dollar a week ago, but decline to N363.57 per dollar during the week, which indicated a depreciation of N1.63, in contrast to the 50 kobo appreciation recorded last Monday, but further depreciated to 367.60 on Wednesday before closing the week at 365.37.

Central Bank of Nigeria (CBN) had intervened in the market on Monday with supply of 195 million dollars, in an ongoing effort to stabilise the forex market.

100 million dollars was offered through the wholesale segment, while  Small and Medium Enterprises (SMEs) segment received 50 million dollars, tuition fees, medical payments and Basic Travel Allowance (BTA), among others, got 45 million dollars.

The apex bank over the time has reiterated its determination to sustain the gains which saw the naira making some gains against the dollar.

The CBN recently noted that it’s determined to sustain the provision of foreign exchange with a view to ensuring liquidity in the market and enhance accessibility and affordability for genuine end users.

The bank had warned commercial banks and other dealers to desist from sabotaging the efforts aimed at making life easier for foreign exchange end users.

In view of this, Chief Consultant of Biodun Adedipe Associates Limited, ‘Biodun Adedipe has said the apex bank has the capacity to sustain ongoing foreign exchange (forex) interventions.

Adedipe, pointed out that the required international benchmark was for external reserves to be able to sustain at least, six months of the import bill adding that Nigeria is still doing great with its reserves covering over 12 months import cover.

He explained that due to recession, the current import figure was a decline from $14.171 billion or monthly average of $4.724 billion in the first quarter of 2015. He said that foreign trade had picked up since the first quarter of last year, with imports declining.

Adedipe described as aberration calls on the CBN to freely float the naira, adding that no country in the world adopts such approach to exchange rate management. He said the ongoing spike in naira exchange rate occurred after the CBN was pressured by several stakeholders to adopt flexible exchange rate system and freely float the Naira.

“That of course, was a huge aberration, as there is no country that freely floats its currency (even the US) – the job of the central bank is to defend and protect its currency by intervening in the markets as necessary. The voices are coming from too many experts that know nothing other than to echo what the Breton Woods institutions have said,” Adedipe stated.