By Odunewu Segun
Naira continues with its dwindling value against the Dollar in the foreign exchange market, dropping further to N369/$1 amidst dwindling supply of FOREX in the market.
National Daily gathered from operators that in recent times, the Central Bank of Nigeria has been reducing its weekly intervention to operators, both in frequency and amount, in the foreign exchange market.
The apex bank only injected $250 million last week into the interbank market as against the over $500 million injected in the past weeks to boost liquidity in the market.
In the last intervention, the wholesale sector was offered the sum of $100 million, just as the Small and Medium Enterprises (SMEs) window received a boost of $80 million. Those requiring foreign exchange to address needs such as Business/Personal Travel Allowances, school tuition, medicals, etc. were allotted the total sum of $70 million.
The intervention, according to a source had been the stabilizing factor behind the Naira against the Dollar and other international currencies like the Euro and Pound Sterling.
The CBN has managed to keep the exchange rate within the 365/dollar to 370/dollar band in the past few months, thanks to the billions of dollar it injected into the market during the period.
An economic analyst, Mr. Johnson Chukwu, said the CBN remained the market maker in the country’s forex market.
As such, he said the regulator, to a large extent, would continue to determine the naira/dollar exchange rate.
Chukwu said, “The CBN determines what it intends to do with the exchange rate at every point in time. The naira will continue to trade between 350 and 400. The naira is still not totally market-determined.
“We have seen the naira depreciate at the Investors & Exporters FX window from 340/dollar to about 360/dollar. The CBN may be driving to conserve the reserves. It may also be seeking to achieve exchange rate convergence.”
“However, we should not also overlook the fact that the demand for dollar will keep increasing at this season because merchants are busy making order for product for sale during the Christmas,” he added.
The naira has weakened further to 369 per United States dollar on the back of waning supply of the greenback in the foreign exchange market.
After closing flat at 365/dollar for one week despite interventions in the forex market by the CBN, the naira weakened to 367/dollar last Tuesday.
After trading flat at 367/dollar for a few days, the local unit closed the week at 369/dollar on Friday.
Similarly, data from FMDQ showed that the naira depreciated by N1.86 in the I&E window last week as the indicative exchange rate rose to N360.36 last week from N358.5 per dollar the previous week.
Furthermore, the volume of dollars traded in the market dropped marginally to $703.14 million last week from $705.08 million the previous week.