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CBN increase forex supply to halt naira depreciation

*Naira gains 80 kobo
The Central Bank of Nigeria (CBN) on Monday halted  the persistent depreciation of the naira  as  it increased foreign exchange supply by 40 per cent $350 million.

naira sygnsThe amount supplied was about 40 per cent higher than the $256 demanded by foreign exchange end users Wholesale Dutch Auction System (WDAS) session hence the exchange rate fell by  80 kobo to N148.03 per dollar from N148.83 per dollar.

Owing to increased foreign exchange demand, the naira had been depreciating since the second foreign exchange auction conducted by the CBN on January 6th. From N147.6 per dollar on the January 4th, the naira depreciated persistently to N148.83 last week. During this period, foreign exchange demand more than doubled to $563.72 million from $222.05 million.

On the international scene,  the euro fell to the lowest level in almost four weeks against the dollar as Germany’s investor confidence slid more than estimated and Europe’s finance chiefs said Greece may have to do more to contain its budget crisis.

The dollar appreciated against most of its major counterparts as the outlook for Europe discouraged demand for higher-yielding assets. Sterling climbed to a four-month high versus the euro as the U.K.’s inflation rate jumped by the most since records began in 1997.

“Perhaps the recovery in the euro zone is starting to run out of steam,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. “We would be sellers of any rebound in the euro.”

The euro slid 0.8 percent to $1.4269 at 11:31 a.m. in New York, from $1.4384 yesterday. It touched $1.4256, its weakest level since Dec. 23. The euro dropped 0.3 percent to 130.18 yen, from 130.58. Japan’s currency depreciated 0.5 percent to 91.24 per dollar, from 90.78.

The 16-nation euro may extend its decline versus the dollar after falling below its 200-day moving average, according to Ronald Leven, a strategist at Morgan Stanley in New York.

“The euro is testing very key technical levels,” Leven said. “We just broke the 200-day moving average, and if that holds into the close today, it’s going to encourage euro bears to be more aggressive.”


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