Naira Gains Strength on Dollars Overflow, As Reserves Rise

The naira continued to gain strength at the parallel market yesterday as an overflow of dollars chased the local currency. The value of the naira which had gone haywire last week rose to around N367 to the dollar.
Bureau de Change operators as well as street hawkers sold the greenback between N367 and N37 while the pounds sold at around N496 to N499. As at last week friday, the value of the naira stood at N370 to the dollar and N500 to the British Pounds.
Also the official rate at the Central Bank of Nigeria (CBN) rose in value to N196.5 to the dollar, even as the external reserves of the country rose slightly for the first time this year. The reserves which had dropped to $27.789 billion rose slightly to $27.793 billion as at February 19, 2016. 
Last week the value of the naira had dropped to an all time low of N398 to the dollar and N520 to the pounds. Abdul Majeed, a money changer at the popular Alade Market in Lagos  told Leadership that there had been an overflow of foreign currency at the market.
“All the people who have been keeping dollars and pounds at home are bringing it to the market now and we are now short of naira. Everyone is looking for naira to buy up the dollars and pounds because there is a lot of it in the market now” he said.
Acting President of Association of Bureau de Change Operators of Nigeria (ABCON), Aminu Gwadabe, had noted that retail currency operators were working to introduce a single quote across the parallel market and maintain a bid-ask spread of 3.5 percent for trades.
“We have set up a unit to monitor compliance with the new measures,” he said, adding that the central bank has been informed of the measures. Gwadabe said the market was trying to adjust to the reality of no currency devaluation by the government.
A bureau de change operator had last week told Leadership that the value of the naira could not maintain the momentum it was going with last week as the value it was during the week did not reflect the true value of the naira. 
President Muhammadu Buhari also on Saturday again rejected the idea of devaluing the West African nation’s currency, despite a hammering of the naira on the secondary market last week.
The President, who spoke at the Presidential Panel Roundtable on Investment and Growth Opportunities  in Sharm El-Sheikh, Egypt, said he rejected pressure to devalue the naira  because Nigeria does not have the competitive advantage to benefit from devaluation.
The Central Bank of Nigeria (CBN) had contrary to the expectations of the international community and analyst refused to devalue the local currency choosing rather to reduce the rate of foreign exchange outflow from the reserves. 
It had exempted 41 items from the list of eligible for foreign exchange, and closed the retail Dutch Auction System (rDAS) and established an order based system.
It had also reduced daily and annual limits on naira cards outside the shores of the country from $150,000 to $50,000 annually and $300 daily and  backed the move by banks to stop accepting foreign currency deposits as well as the recent ban on the usage of naira denominated cards abroad.

Leave a Reply

Your email address will not be published. Required fields are marked *