Naira dips at official, unofficial markets in Nigeria

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The naira on Monday closed at N1,223 /$ in the unofficial market, causing the Nigerian currency to pause its winning streak against the American dollar on a weekly spectrum.

On the black market on Sunday, the U.S. dollar sold at N1,207, a 15 percent weekly decrease from N1,050/$ at its peak last Monday.

At the official market, the local currency closed at N1,234.49/$ as against N1,169.99/$ which it closed at on Friday

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Before this week’s reversals, the recent appreciation of the Naira was attributed to the strategic interventions by the CBN, notably the clearance of a US$4.6billion of the verified backlog of foreign exchange claims, the implementation of the willing-buyer, willing-seller model in the fx market, and the removal of the allowable limit on exchange rates quoted by international money transfer operators (IMTOs), and the CBN’s enhancement of FX liquidity.

In March, the CBN commenced weekly dollar sales of US$10,000 to registered Bureau De Change (BDCs) at N1,251/USD. The BDCs were directed to sell to eligible customers at a maximum rate of 1.5percent above the purchase price.

This resulted in an over 34 percent appreciation of the Naira against the dollar on the official market, according to data from the Financial Market Dealers Quotations (FMDQ).

Although the Bank’s efforts to increase foreign exchange liquidity have resulted in the appreciation of the Naira relative to major foreign currencies, there are concerns about its impact on the gross official reserves.

According to CBN data as of April 16, the gross official reserves balance amounted to US$32.2billion, marking a -6.4 percent month-on-month and -2.4 percent year-to-date decrease from US$34.4billion (March 15) and US$33billion (January 2), respectively.