The sustained auction of the dollar at the interbank by the Central Bank of Nigeria (CBN), yesterday strengthened the Naira from the beginning of transactions to the end, as it recorded straight gains.
The Naira, which closed at N282 per dollar yesterday, gaining N2 from Tuesday’s record of N284, was supported by sustained auction by CBN.
By the guidelines of the new forex policy, the apex is to play in the market as a participant, just like banks and other foreign currency earning institutions in the country.
The Executive Director, Finance, BGL Capital Limited, Femi Ademola, said the market is gradually adjusting to the dynamics.
According to him, yesterday’s record showed that the pent-up demands are being put under control with the CBN ‘s futures trading, which cleared huge backlog.
“The first two days of volatile rates were due to volume of demand as CBN battles the backlog. With lesser demand today, the exchange rate was moderated. I am optimistic that in few weeks from now, the exchange will come to N250 per dollar,” he said.
Meanwhile, the Association of Bureau De Change Operators of Nigeria (ABCON), has said that sustained BDC operations will close the gap between parallel and interbank market rates, if CBN grants them primary dealership.
ABCON President, Alhaji Aminu Gwadabe, said the current situation is not new in the country, as the former CBN Governor, Chukwuma Soludo, when faced with it, consulted the association in 2006.
“Granting BDCs primary dealership licence certainly close up or eliminate the exchange rate gap completely. It is easier to accuse BDCs of causing the rate hike, but now they have been shut outright from the market.
“We are going to have an interactive session with CBN on June 29. We have many reasons why the central bank should allow BDCs to participate in that market. The distribution of the dealership is not potent like the BDCs, so their service is very important to the economy,” he said.
At the first session of the newly adopted flexible foreign exchange regime on Monday, the Naira, although it lost to the dollar traded between N253 and N281.5, defying predictions.
CBN injected $532 million into the market under its special intervention at N280/$ and $3.5 billion at the future trading platform.
On Tuesday, with a $100 million auction by the CBN the Naira regained strength from a N287 per dollar fall to N284 at the end of trading.
Comments