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Naira unchanged on CBN intervention bid

By on September 17, 2014

The naira maintained its Friday’s value of N162.95 to a dollar monday.

This was attributed to a request by the Central Bank of Nigeria (CBN) that banks should bid to sell the greenback, in a move to quell dollar shortages and support the nation’s currency; Reuters quoted dealers to have said.

The local unit opened at N163.05 to a dollar and weakened further to N163.50 naira intra-day on strong demand, prompting central bank’s interest.

Dealers said news of the proposed bid made some lenders sell dollars in order to participate as central bank usually sells dollar at a discount to interbank market, helping the naira recover to Friday’s level.

“The central bank called round to get a feel of the market … some banks saw this as a signal that the bank could intervene,” one dealer said.

Dealers said dollar flows has slowed after the Nigerian National Petroleum Corporation (NNPC), which accounts for bulk of dollar supply on the interbank sold about $300 million last week. But this failed to lift the local currency.

Meanwhile, the Renaissance Capital (RenCap) in its latest report noted that Nigeria’s recovering forex reserves, at $39.57 billion brings anticipated cut in interest rate closer.
It argued that measures the CBN had taken to “plug the holes” in forex reserves, including the revision of the Bureau de Change (BDC) regulations, would help conserve the nation’s external reserves.

“We no longer expect naira devaluation only some depreciation as the February 2015 elections approach.
“We think a firmer currency will help dissipate inflationary pressures and improve the likelihood of rate cuts,” it added.

[This Day]