Naira Rebounds On Central Bank’s Intervention

Naira Rebounds On Central Bank’s Intervention
Naira-Vs-Dollar

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.

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