Naira sells below N400 to dollar first time in 8 months

The naira on Thursday sustained its steady rise against all major currencies in the market, trading at N390 to a dollar as against the N400 it sold for on Wednesday, while it also appreciated against the Euro, trading at N400 and remaining stable against the Pound Sterling at N465, National Daily has gathered.

The significant gains made by the naira at the parallel market, according to market analysts, is a reflection of the improved confidence in the Forex market following the sustained dollar interventions by the CBN since February.

A Bureau de Change operator, who preferred anonymity in Lagos, said that the gains made by naira over the dollar were due to CBN’s continued flooding of the market with dollars while there were very few or no customers to patronise them.

He said several retail customers who used to resort to the BDCs, which indirectly funded the parallel market, to fund invisible transactions now bought dollars at a lower rate from the banks.

With the gains made by the local currency in the last five weeks, the naira inched closer to one of the Central Bank of Nigeria’s key foreign exchange policy objectives of an exchange rate convergence.

On Wednesday, when the dollar traded for N400, it marked the beginning of the true convergence of official and black market foreign exchange rates.

At the Foreign Exchange (FX) interbank market, the naira traded for N375 to the dollar for invisibles and N307 to the dollar for manufacturers and importers of raw materials eligible to buy Forex from the segment of the market.

In all, the Central Bank has auctioned a total of $1.9bn through forward sales as well as targeted intervention for invisibles. This amount does not include its daily intervention of $1.5m on the interbank market.
The last time the naira traded at between N390 and N400 to the dollar at the parallel market was in August 2016.