Naira Rebounds On Central Bank’s Intervention

The naira rose sharply against the dollar last week as the Central Bank of Nigeria (CBN) intervened three times to lift the nation’s currency from yet another record intra-day low, some dealers revealed.

The naira closed at N181 against the dollar yesterday, up by 3.6 per cent, from its early session low of N187.55 to a dollar, Reuters revealed.

The currency had closed at N184.10 the previous day.
As oil prices stayed persistently weak around five-year lows, the central bank, which devalued the currency by eight percent recently, has been struggling to keep the naira trading within its new band of N160-N176 to the dollar.
The naira has lost 12.3 percent this year.

Dealers said oil companies were also selling dollars and some banks were buying naira ahead of a today’s treasury bills auction.

It was gathered that Addax Petroleum supplied $4.5 million to the market, while Mobil’s $36 million and Saipem’s $15 million Monday sales hit the market.

“We expect the naira to strengthen further … if the central bank continues to intervene this way … coupled with the market expecting large dollar sales from (state-owned oil company) NNPC,” one dealer said.

The central bank failed to meet dollar demand at its twice-weekly auction the previous day when it sold about $169 million dollars at N168 versus recently rate of N165, dealers said.

The banking sector regulator has typically sold between about $200 million and $300 million at previous auctions.
The central bank had devalued the naira recently to try to halt a decline in the foreign reserves of Africa’s leading energy producer as oil prices slump.

Nigeria’s external reserves were down to $36.8 billion as at November 28, compared with the $44.6 billion it stood a year ago.