CBN Adjusts Foreign Exchange Peg Again, Naira Firms at Unofficial Market

The Central Bank of Nigeria (CBN) adjusted its exchange rate peg on yesterday to N196.95 against the dollar from the N197 set since July, traders said, quoting a broadcast from the regulator.
The adjustment is the sixth since the central bank introduced a tight controls on the foreign exchange market in February.
The bank said at the time it would sell dollars only at N198 to customers through the interbank based on direct orders by banks.
The local currency appreciated on the parallel market on Wednesday, trading at N222 to the dollar, better than N224.50 a dollar on Tuesday after the central bank injected $80 million into the bureau de change market, traders said.
The naira also closed firmer at the new rate of N196.50 to the dollar at the official interbank market compared with N197 per dollar rate the previous day. 
Te central bank on Tuesday sold N53.08 billion ($266.6 million) worth of treasury bills on Tuesday in a bid to mop up excess liquidity, dealers said, as the currency weakened on stronger demand from importers.
The bank issued the 275-day open market operations (OMO) bills at 13.50 percent, they said.
The interbank lending rate traded at six percent for overnight placement, almost unchanged from Monday’s 5.83 percent.
The interbank market almost froze two weeks ago after authorities ordered banks to transfer all government revenues to its Treasury Single Account (TSA) with the central bank, part of an anti-corruption campaign.
To ease liquidity shortages, the central bank cut banks’ cash reserve ratio to 25 percent last week.
“The market is active now because of higher liquidity from budget allocations and repaid matured treasury bills,” another dealer said.
The naira weakened against the dollar on the parallel market to N224.5 to the dollar from N223 a dollar the previous day on strong demand from importers stocking up ahead of forthcoming Christmas sales.
“We are seeing a renewed pressure on the naira from some importers stocking ahead for the coming Christmas sales and some people converting their naira to dollar,” Aminu Gwadabe president of Bureau de Change operators, said.
Nigerian importers have struggled to obtain dollars as the central bank has limited imports to offset a collapse in oil revenues, the economic lifeline of Africa’s most populous country and biggest energy producer.
Gwadabe said speculation that government plans to change the colour of banknotes to stop forgeries could be another reason for the fresh pressure on the local currency.
The naira traded at N197 naira to the dollar on the official interbank market, unchanged since February. 

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