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CBN sold $2.8bn to stabilise naira in September

By BusinessNews Staff on October 3, 2013

Despite the pressure faced by the naira at other segments of the forex market in September, the traditional intervention of the Central Bank of Nigeria (CBN) at its regulated Wholesale Dutch Auction System (WDAS) during the month helped to stabilise the naira.

However, from today, the WDAS will no longer exist following its suspension and the re-introduction of the Retail Dutch Auction System (RDAS) by the CBN.

Data compiled by THISDAY showed that the central bank supplied a total of $2.8 billion to dealers at the WDAS in September. This represented an increase by 17 per cent, compared to the $2.4 billion offered by the regulator in August.

However, the CBN sold only $2.626 billion out of the total amount it supplied to the market in September, higher than the $2.165 billion, which was purchased by dealers the previous month.

While the CBN offered $300 million apiece at eight trading sessions held during the month, it raised its dollar supply to $400 million on September 25th, as part of efforts to bolster the naira. The lowest level the naira attained against the dollar at the WDAS was N155.76/$1; while it’s highest value in the month under review was N155.75/$1.

Throwing more light on the RDAS window, the CBN explained that the minimum bid by authorised dealers shall be $100,000.00, saying that just like the WDAS, auction at the retail dutch auction would be held every Monday and Wednesday.

“The importation of foreign currency banknotes by dealers shall henceforth be subject to a prior approval by the CBN. Any authorised dealer intending to import foreign currency cash is required to forward an application, stating the amount and purpose to the Director, Trade and Exchange Department, CBN for consideration,” the central bank added.

Meanwhile, at the interbank arm of the forex market, the naira closed at N161.60/$1, N162/$1 at the Bureau De Change and N163/$1 at the parallel market on the last trading day in September. The Financial Market Dealers Association (FMDA) predicted that in the near term, the nation’s currency would appreciate against the dollar following the withdrawal of public sector deposits in banks.

Also, it is expected that the clamp down on perceived illegal forex sales by some BDCs last month would bring sanity into the system, thus strengthen the naira.
The central bank last weekend withdrew the operating licences of 20 BDC operators and requested the Economic and Financial Crimes Commission (EFCC) to investigate them for money laundering.

[This Day]

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