…dollar liquidity tightens
The naira dropped further on Wednesday morning to sell at a rate of N453 to $1 at the black market as against N451 to $1 which it recorded on Tuesday, showing a differential of N2, as individuals and businesses rushed to meet their payment obligations through the black channel of Nigeria’s currency market.
Local importers were left scrambling for dollars, while providers of foreign exchange, such as foreign investors have not returned to the country.
The naira has been hitting record lows on the parallel and over-the-counter spot markets since early March, when the Central Bank of Nigeria adjusted the value of the naira by 15 percent.
A source at one of the commercial banks, however, stated that the Central Bank of Nigeria has been trying to improve the liquidity on the interbank market.
Several days ago, the CBN withdrew around N460bn from Nigeria’s banking system, the source said, adding that the bank resumed dollar sales to local clients, selling around $100m per week.
The source further disclosed that CBN had yet to sell to foreign-based investors, after it scrapped a planned auction because of lockdown measures to slow the COVID-19 pandemic.
A stockbroker, Emmanuel Edobor, said he expected the naira to hover around N440 to $1 support levels.
“With the recent recovery in oil price and greater scope for more concessionary borrowing/debt reliefs, we now expect the CBN to re-price the naira to N400/$ at the I&E window by year end, with a trading band of N390/$ to N410/$.”
The CBN recently said it would use all the monetary tools it had to rescue the Nigerian economy from the fallouts of the COVID-19-induced global economic strain, and stabilize the naira.