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Naira devalues further as CBN battle to save currency

Nigeria’s Naira traded at 283 to the dollar at the interbank rate and 340 at the parallel market Friday as the battles to save the national currency.

 

In a bid to review and fine-tune the newly introduced foreign exchange policy, as well as discuss the current liquidity crisis that has astronomically raised interbank rates, lenders’ head of treasury are meeting with the top officials of the Central Bank of Nigeria (CBN) in Lagos on Sunday.

 Nigeria’s central bank is selling dollars on the interbank market for the fourth day to ease dollar shortages after it floated the currency, traders said.

The naira traded at 283 to the dollar at 1249 GMT yesterday, on volumes of $76.8 million, which traders attributed to the central bank intervention. The interbank market opened at 0800 GMT with no activity for more than three hours.

Nigeria ditched a peg on the naira to allow the currency to trade freely on the interbank market but traders say dollar liquidity was tight, leaving the central bank as the main supplier of hard currency.

LAGOS PARALLEL MARKET RATES

Quotes:    * morning    **midday    ***evening 

ngn NGN usd USD gbp GBP eur EUR

                 BUY / SELL     BUY / SELL  BUY / SELL

24/06/16 335 / 345**     470 / 486** 367 / 375**

24/06/16 340 / 345*       460 / 475* 370 / 385*

23/06/16 340 / 345       460 / 475   370 / 385

22/06/16 325 / 335       450 / 460      370 / 385

21/06/16 335 / 342      450 / 470 370 / 385

20/06/16 330 / 345    435 / 455 360 / 380

18/06/16 330 / 335    450 / 500 340 / 390  – AbokiFX

The planned consultation emerged hours after Fitch Ratings downgraded Nigeria’s Long-term foreign currency Issuer Default Rating (IDR) to ‘B+’ from ‘BB-‘ and Long-term local currency IDR to ‘BB-‘ from ‘BB’ with stable outlooks.

It was learnt that the meeting, which is at the instance of the treasurers, is basically to review the new forex policy that commenced last Monday and possibly fine-tune some of the grey areas.

The meeting, which is billed for the corporate head office of FMDQ OTC Securities Exchange (FMDQ) – in Victoria Island, Lagos, is the second of such consultations in the last three weeks (last one held on June 1) and treasurers who spoke with this newspaper are upbeat – especially with the Standard Foreign Exchange Forward Market slated to commence on Monday.

Meanwhile, Mobil Oil Producing Company was the toast of the FX market yesterday, as the oil firm sold about $100 million, a development that helped to instill more confidence in the market, even though treasurers insisted that liquidity still remained a challenge.

Also, for the fourth consecutive day since the trading on the new forex policy began, the apex bank yesterday sold dollars to ease shortages, further leading to the strengthening of the naira.

Data obtained from FMDQ website showed that the naira closed at N281.67 to the dollar yesterday as against N282.80 the previous day.

In a bid to prevent a liquidity crisis in the interbank FX market, triggered by the naira debit on banks by the banking watchdog for over $4 billion backlog, the latter had, last Wednesday, opened a discount window for lenders to meet their short-term dollar demands.

This temporary liquidity brought down interbank rates and helped to stabilise activities in the interbank FX market.

 

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