By Babajide Komolafe
LAGOS — The Naira, yesterday, rose by 200 kobo against the dollar in the interbank foreign exchange market following intervention of the Central Bank of Nigeria (CBN) through special sale of foreign exchange in the market.
The intervention caused the interbank exchange rate to fall to N161 per dollar from N163 at the beginning of trading, yesterday.
A senior bank foreign exchange dealer who spoke on condition of anonymity confirmed to Vanguard that in addition to the $400 million sold, yesterday, at the official bi-weekly foreign exchange auctions, the CBN also sold dollars at the interbank market in a bid to bring down the interbank exchange rate and thus narrow the gap between the interbank and official exchange rate.
Vanguard investigation revealed that the naira is expected to further appreciate today due to indications that the Nigerian National Petroleum Corporation, NNPC, will sell $400 million today.
Meanwhile, the official exchange rate stabilised, yesterday, at N155.9 in the official market, as the CBN sold $400 million at the bi-weekly auction.
Up till last week, the naira had steadily depreciated in official and interbank market.
Since May 26, the naira depreciated persistently at the bi-weekly auction as the exchange rate rose steadily from N155.69 per dollar to N155.9 per dollar last week Monday. Similarly, the naira depreciated by 386 kobo as the interbank rate rose to N163.21 per dollar last week from N159.35 per dollar on May 23rd.
However, the Financial Derivatives Company in its monthly economic report blamed the depreciation of the naira on foreign exchange round-tripping, speculation and repatriation of profits by foreign companies.
The report said: “We believe that the weakening of the Naira includes a combination of several factors: Multinationals who have declared dividends have increased their demand for forex for the purpose of repatriating earnings;
“Speculators besieging the market to take positions, due to their expectation of a weaker currency as a result of the declining trend in oil prices; i.e. lower oil prices will result in a slowdown in external reserves accretion and the ability of the CBN to continue its support of the Naira.”
The divestment of international investors’ funds from high yield government securities is increasing the demand for forex; Round-tripping between the official and parallel market. The spread between parallel and official rates has widened to levels last seen in December 2009 and early January 2010. The gap between the official spot rate and the parallel cash rate is currently N9.1, from a low of N2.94 in March.