Naira Gains as CBN Floods Market with $457.3m

The naira appreciated to N386 to the dollar on the parallel market yesterday, stronger than the N390 to the dollar it maintained throughout last week, as the Central Bank of Nigeria (CBN) injected the sum of $457.3 million into various segments of the market.

Abreakdown of the offer indicated that both spot and forwards garnered the sum of $267.3 million while the wholesale segment got $100 million. Also, the small and medium scale enterprises (SMEs) and invisibles segments comprising of basic travel allowance, tuition fee and medical got and $50 million and $40 million respectively.

Meanwhile, a check on the volume of trading on the Investors and Exporters foreign exchange window in the past three weeks on the FMDQ platform revealed that the sum of $600 million has been sold by both the CBN and autonomous sources. This, was largely responsible for the positive momentum observed in the stock market in the last three weeks.

The Nigerian equities market made record gains for three weeks in a row, surging by 11.9 per cent, following renewed demand for stocks by foreign portfolio and domestic investors on the back of introduction of the new foreign exchange window for investors and exporters by the CBN.

In a bid to boost liquidity in the forex market, the CBN introduced the window last April that allows market participants to determine the exchange rate of the naira on a willing buyer, willing seller basis. But to promote liquidity and professional market conduct, the central bank may from time to time participate in the market.

Transactions under the new window include invisible transactions such as loan repayments, loan interest payments, dividends/income remittances, capital repatriation, management service fees, consultancy fees, software subscription fees, technology transfer agreements, personal home remittances and any such other eligible transactions including “miscellaneous payments” as detailed under Memorandum 15 of the CBN Foreign Exchange Manual.

However, the NSE market capitalisation and All-Share Index closed at N9.51 trillion and 27,513.69 basis points respectively yesterday.

When contacted for comments on the developments in the market, the Acting Director, Corporate Communications at the Central Bank of Nigeria, Isaac Okorafor, expressed satisfaction with the level of activities in the market. While confirming the sales figure for the day, Okorafor singled out the Investors and Exporters segment noting that the volume of activities was an indication of the fact that investors are being attracted to the financial market and the economy in general.

Nigeria’s external reserves was at $30.911 billion as at May 11, according to the CBN.