The naira continued to strengthen on the parallel market on
Monday to close at N435 to the dollar, stronger than N450 to the dollar at
which it closed last Friday, as the Central Bank of Nigeria (CBN) continued to
relentlessly pump the greenbank into the interbank foreign exchange market to
meet the demand of bank customers.
But the buy rate of the greenback rose slightly to N430 to
the dollar Monday, against N440 last Friday.
Several parallel market operators who had been stockpiling
dollars for months, were seen lamenting that the CBN’s intervention was forcing
them to offload their dollars at a loss.
But as they bemoaned their losses, market analysts cautioned
that they were likely to incur more losses, as the CBN, in keeping with its
determination to increase liquidity in the FX market Monday pumped a fresh $180
million into the interbank market.
A breakdown of this amount showed that the CBN sold $100
million through its special wholesale intervention forwards and pumped an
additional $80 million to the banks, specifically for school fees, medicals,
and Business and Personal Travel Allowanced, among other invisible
transactions.
CBN also said it would with “immediate effect give Travelex
$4 million weekly to satisfy demand for travel allowances at the Lagos and
Abuja airports”.
In a statement released Monday, the CBN’s acting Director,
Corporate Communications, Mr. Isaac Okorafor, said the central bank’s
commitment to providing enough FX for legitimate business remains unshaken,
reiterating that it would do “everything possible” to maintain the steady
supply of forex to the market.
In all, the new FX measures introduced by the CBN aimed at
improving liquidity in market has led to the appreciation of the naira by N85
in just one week.
Analysts are projecting that the naira might appreciate to
about N400 to the dollar on the parallel market this week, effectively meeting
the CBN’s objective of closing the gap between interbank and parallel market
rates.
The CBN had maintained that much of the dollar demand was a
bubble created by speculators and hoarders of the greenback.
Also, speaking on a programme monitored on Raypower FM in
Lagos Monday, Okorafor urged currency dealers and others hoarding dollars to
make hay and sell their holdings in order to avoid heavy losses.
He added: “I want to assure that we would provide enough
liquidity in the market and we will sustain liquidity in the market. The
country is opening up and foreign reserves are improving. Many people outside
are beginning to realise the huge opportunities in this country.
“You can see the subscription of the Eurobond. It clearly
shows the potential in this economy. This economy is bottomless when it comes
to investment opportunities.
“So, ultimately, the exchange rate would improve and anybody
hoarding dollars would suffer for it.”
Responding to a question on the impact of the continuing ban
of 41 items from accessing the official FX market, the CBN spokesman said: “The
savings we have made from the elimination of the 41 items from the FX market
have been very huge.
“Nigerians are beginning to adapt to made-in-Nigeria
products and indeed we have supported some local manufacturers.
“Apart from rice, we are funding the production of palm oil
and other produce.
“We have two firms now producing toothpicks in Nigeria. So,
you can see that even though people criticised the removal of the 41 items,
which is one thing that we held on to, to change the entire economic landscape
of this country.
“No country is known to have succeeded or became great by
depending on outsiders for its food, fashion, drinks, and others. We cannot
continue like that.
“We must change our appetite for foreign goods and services.
We are determined to fund the FX market.”
Meanwhile, Nigeria’s external reserves increased further to
$29.414 billion, according to latest figures made available by the CBN..
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