After nearly $5bn intervention, Naira remains unstable

• External reserves decline by $68m in a week

By Odunewu Segun

The Naira on Wednesday remained unstable at the parallel market, drifting between N364 and N365 to a dollar within day at the parallel market due to weak demand for dollars.

National Daily findings revealed that the parallel market exchange rate, which dropped to N364 per dollar on Tuesday, rose to N365 per dollar yesterday morning, but dropped to N364 per dollar at the close of business

This latest development didn’t come on a platter of gold. It came at a price-depletion of the nation’s foreign reserves.

National Daily gathered that in the process of strengthening the Naira, the Central Bank of Nigeria, between February and June, has pumped nearly $5bn into the FX market.

This week alone, the CBN injected close to a billion dollars into the various segments of the FX market.

The apex bank injected 413.5 million dollars on Monday June 12 and another 418 million dollars on Tuesday June 13.

Figures obtained from the CBN indicate that total money released between Monday and Tuesday showed that retail segment of the market received the highest intervention of 486 million dollars, followed by the wholesale window which received 200 million dollars.

The Small and Medium Enterprises window got 78 million dollars, while business/personal travel allowances, school tuition, medicals was allocated 67.5 million dollars.

ALSO SEE: Naira stable at N363/$1 as CBN sustains dollar intervention

Aminu Gwadabe,resident of the Association of Bureaux De Change Operators of Nigeria (ABCON), said the effectiveness of the CBN’s dollar injections in the interbank and the stability in the market require that the regulator reviews the rate band for bureaux de change (BDCs) downwards from N360/$ to $340/$.

Gwadabe said the naira has remained stable across the board in the near term on increased dollar supply to both the official interbank window and the black market. It has been trading around N382/$ on the parallel market in the last two weeks, while at the interbank market the naira was trading at around N305.40/$.

Meanwhile, Nigeria’s external reserved has dropped to $30.22 billion, the lowest level in three months.

According to the Central Bank of Nigeria, the external reserve dropped to $30.222 billion on Tuesday June 13th, representing a weekly decline of $68 million when compared with the $30.290 billion achieved the previous Tuesday of June 6th.

Analysts revealed that the new level of $30.22 billion represents the lowest level since March 14th, or 13 weeks ago, when the reserve was $30.23 billion.

The reserve has been on the downward trend since May 4th when it reached a peak of $30.99 billion. Since then, the reserve has dropped by $770 million.