By Babajide Komolafe

Oil firms boosted foreign exchange supply with $480 million in April while the Central Bank of Nigeria (CBN) sold $2.1 billion at the bi-weekly foreign exchange auction, said Financial Market Dealers Association (FMDA).

Despite this, the naira depreciated across the three segments of the foreign exchange market, losing one kobo at the official market, 15 kobo at the interbank market and N1 at the bureaux de change segment.

In its review of the economy in April, the Association, said, “The wholesale market for foreign exchange experienced higher market demand compared to the previous month. The apex bank offered $2.4 billion and sold $2.15 billion in relation to $1.940 billion offered and $1.9 billion sold in the previous month, reflecting an increase of 23.7 percent and 13.3 percent respectively.

The sizeable increase in WDAS foreign exchange supply was compromised by the regressive inflows from energy companies estimated at $480 million which proved short to douse rising demand. We expect to see improved supply trend especially from the secondary market and anticipated entry of foreign portfolio investments in the Debt markets.”

“The Naira weakened against the dollar across the four segments. The naira depreciated by 1k at CBN

WDAS window, 15k at interbank and 100k at BDC and parallel market relative to the average rates in

the previous month. The Naira depreciated in the interbank market as a result of demand surge from importers to cover import bills albeit short dollar supply, slow foreign capital inflows and unstable crude oil prices.

“The dollar traded in the ranges of N155.74 –N155.75 per dollar at WDAS, N157.35 – N158.98 per dollar at Interbank, N159.50 – N160.50 per dollar at BDC and N160 – N161 per dollar at parallel market.

Further analysis on month–on-month basis revealed an opening figure of N155.74 per dollar for selling rate at the first working day at the WDAS, and closed the month of April at N155.75 per dollar against the closing rate of N155.74 per dollar in the previous month.

At the Interbank market, Naira-Dollar relationship opened at N158.6 per dollar for Offer rate and closed at N158 per dollar   in April against the closing rate of N158.65 per dollar in the previous month. The BDC and parallel markets closed the month at N160.5 per dollar and N161 per dollar respectively.

“The premium between CBN and parallel market as at end-April rose to 4.75 percent from 3.04 percent recorded at the end of the previous month. The premium reflects a margin of 0.25 percent below the international benchmark of five percent, a clear signal of the current pressure on the local currency in the face of the apex bank’s foreign exchange management efforts at nipping volatility in the bud.”