By Babajide Komolafe
The depreciation of the naira in the interbank market was halted on Friday by inflow of $500 million foreign exchange sale by the Nigeria National Petroleum Corporation (NNPC).
Prior to the inflow the naira had depreciated by 226 kobo on Thursday at the interbank foreign exchange market, with the interbank rate rising to N153.35 per dollar from N151.09 at the beginning of the week.
On Monday, it lost 182 kobo to the dollar, gained 46 kobo on Tuesday, but lost 15 kobo and 75 kobo on Wednesday and Thursday respectively.
But the inflow from the nation’s energy giant reversed this trend on Friday, prompting the interbank rate to fall to N152.55 per dollar, representing 80 kobo appreciation of the dollar.
But compared to the previous week, the naira depreciated by 146 kobo at the interbank market.
The depreciation, investigation revealed, was prompted by apprehension over the outcome of the official foreign exchange auction on Wednesday, where demand shot up by 61 per cent.
In addition to this was surge in demand for foreign exchange in the interbank market prompted by the customer of a particular bank.
But at the official market, the naira continued its appreciation gaining 214 kobo as the official exchange rate fell to N150.5 per dollar from N152.64 per dollar.
This is in spite of marginal increase in demand for foreign exchange at the bi-weekly Wholesale Dutch Auction System (WDAS). Demand rose to $502 million from $497 million, while the CBN sold $460 million.
At the auction conducted on Monday, the naira appreciated by 107 kobo despite slight increase in foreign exchange demand at the auction conducted by the apex bank.
The exchange rate dropped to N150.9 per dollar from N151.97 last week. Demand rose to $192.33 million from $182.96 million in the last auction.
At the Wednesday auction, demand rose to $310 million from $192 million on Monday. Though the Central Bank of Nigeria initially offered $150 million, investigations reveal that this was later increased to accommodate the increased demand.
Consequently, in spite of the increased demand, the naira gained four kobo as the official exchange rate dropped to N150.5 per dollar from N150.9 per dollar the previous day.