By Odunewu Segun
The naira has further firmed to the dollar, trading for N281.72 in the early hours of today as against N284 .83 it recorded against the dollar on Tuesday’s evening.
Only $360,000 has exchanged hands by 1015 GMT, traders said, adding that the interbank market will become active once dollar liquidity increases. In the non-deliverable forwards market, the naira rose against the dollar on Wednesday, with the one-month contract quoting the currency as firm as 288, after hitting 317 on Monday.
The central bank’s move to float the currency has narrowed the gulf between the naira rates available on the official and black markets, though unofficial traders were still offering it at 340 to the dollar on Wednesday.
On Monday, the CBN said it cleared a total foreign exchange demand backlog of $4bn, with a dollar exchanging for N280 at the foreign exchange market.
The Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, for Nigerians to have an appreciating currency, the state of supply sources must be quite strong. “Today, the central bank is virtually the sole supplier in the primary segment of the market. Until the other sources develop, then the naira will continue to be under pressure.”
Similarly, the Chief Executive Officer, Chapel Hill Denham, a Lagos-based investment bank, Mr. Bolaji Balogun, said the CBN should have done this six months ago. “By now, the backlog would have been cleared. By delaying so long, the backlog builds up and you have much more to clear. We must clear that backlog.
“Investors are going to watch the market and gradually deep their toes back into the market. An investor who had $500m to $600m here is not going to bring it back at once. They will make sure that the market is working before they will bring in big money.”
“They can’t do this for months. We could see further pressure on the naira and it may depreciate to about 300 per dollar,” Bloomberg quoted Jonas David, a Zurich-based emerging-markets analyst at UBS Wealth Management to have said.