Hopes of further appreciation of the naira brightened yesterday as the nation’s external reserve rose to $30 billion, the highest in 13 months. Consequently, the external reserve has risen by $4.2 billion since the beginning of the year, and by $6.2 billion since October 19th, 2016 when it commenced its upward trend.
Meanwhile, the naira yesterday appreciated to N455 per dollar in the parallel market as the Central Bank of Nigeria (CBN) injected another $195 million into the foreifn exchange market. The apex bank sold $100 million in wholse forwards, $70 million to meet demand for personal and business travel allowance and $25 million to bureaux de change (BDCs).
President, Association of Bureaux De Change (ABCON), Alhaji Aminu Gwadabe, confirmed this development to Vanguard, saying 3,114 collected $8,000 each from the CBN yesterday. The dollar supply prompted the parallel market exchange rate to drop to N455 per dollar from N465 per dollar on Monday, indicating N10 appreciation.
This development was in sharp contrast to the N17 depreciation suffered by the naira on Monday against the dollar, due to upsurge in demand by importers travelling to China. Gwadabe expressed optimism that the naira will further appreciate in the coming week, based on expectation of increased dollar sales to BDCs by the CBN.
He disclosed that the apex bank in furtherance of its intervention in the foreign exchange market has decided to increase weekly dollar sales to each BDCs to $15,000 from $8,000. Since Monday February 20th 2017, when it announced new measures to boost dollar supply and forestall the declining fortunes of the naira in the parallel market, the CBN has intervened in the forex market six times as follows: Tuesday February 21st, $417 million; Thursday February 23rd, $231 million; Monday February 27th, $180 million; Friday March 3, $350 million, Monday March 6, N367 million; and on Tuesday with $100 million.
Acting Director, Corporate Communications Department, CBN, Isaac Okorafor, said that the move by the intervention by the CBN was to fund the commercial banks with enough forex to cater for the request of customers to meet personal travelling allowance (PTA), basic travelling allowance (BTA), medicals and tuition fees. Commending the move, market analysts observe that it will further create problems for currency speculators who are yet to recover from the sudden appreciation of the Naira.
According to the former Economic Adviser to the President and Minister, National Planning Commission, Professor Ode Ojowu, “It appears this time around, the CBN has decided to become smarter than the market manipulators, by putting on its cap of authority to look beneath the market forces” It will be recalled that the CBN, in February 2017, changed its forex rule supply to guarantee supply to both small and the big end-users.
The policy has restored stability and bolstered market confidence which has ultimately boosted the value of the Naira. Operators in the market have also commended the efforts of the CBN in ensuring the continuous appreciation of the naira. This they attributed to good policy and effective communication strategy, which has witnessed increased dollar supply to the market through a deliberate policy of the apex bank.