By Nse Anthony-Uko
ABUJA, (Sundiata Finance) – The Central Bank of Nigeria (CBN) sold dollars at the interbank market and also to bureau de change operators, thus strenthening the exchange of the Naira to the only at the parallel market.
The naira firmed on the streets on Tuesday following the CBN $100 billion intervention even as the external reserves of the country continued to deplete on weakening crude oil price at the international market.
The naira which had weakened to N382 to the dollar just before the long weekend, appreciated to N380 to the dollar on Tuesday following a $100 million offering by the apex bank at the interbank market to meet wholesale spot and forward demands.
This is aside the first leg of the twice weekly $20,000 dollars which it sold to each BDC on Tuesday.
Money changers said the naira had gained strength due to the inflow of dollars at the BDC end of the foreign exchange market.
Traders said the CBN had issued a notice to banks on the auction which would be settled within the next 60 days. Although the naira firmed at the parallel market, it weakened at the Investors and Exporters window where it dropped to N381.44 from N381 which it closed last week Friday.
The apex bank has maintained its intervention at the foreign exchange market since February this year as the external reserves of the county rose. The external reserves which had risen to $30.988 billion as at May 5, 2017, the highest level in the year has been on a decline since the beginning of the year.
The reserves has dwindled by 1.6 per cent or $494 million within the month as the 30 day moving average of the reserves stands at $30.494 as at May 25, 2017. The price of crude had begun decline since h OPEC meeting last week as traders said they expected more cuts.
OPEC had agreed last week to extend its existing production cuts by nine months – more than the initially suggested six months – in tandem with non-OPEC producers, including Russia.
But hints from the group that it could deepen supply cuts, extend them by as long as 12 months, curtail exports and tell the market how exactly it would terminate supply curbs in 2018 had raised market expectations much higher. As at Tuesday the price of crude was down to $49 while Brent sold at $51 at the international market.