The nation’s currency, the Naira on Tuesday, November 8, recorded gains against the dollar as it settled at N465 per US Dollar in the black market. This is higher than the N470 per dollar rate it maintained for the past one week.
This is even as the federal government of Nigeria plans to sell N119.92billion ($376.22 million) in short-dated treasury bills at an auction on Nov 16, the Central Bank of Nigeria (CBN) disclosed on Tuesday.
A total sum of N32.43 billion will be sold in the three-month papers, N22.82 billion in six-month bills and N64.67 billion in one-year bills, the apex bank said in a public notice. Payment for the purchases would be made on Thursday.
At the close of trading at the interbank market on Tuesday, the naira settled at N305.27 to the dollar after the Central Bank of Nigeria’s (CBN’s) $1.5million intervention helped it to a rebound from initial record low of N375.50 to the greenback.
Meanwhile, at the interbank market, traders confirmed that CBN’s sales of dollars to some commercial lenders helped the naira to close at the previous day’s rate of N305 to the greenback.
An official at trading platform FMDQ confirmed a single trade worth $10,000 had been made at a rate of 376.63 early on Tuesday but gave no further details.
Liquidity on the official market remains limited and dealers said importers seeking dollars need to go to the black market, where the local currency traded at N465 on Tuesday, slightly up from N470 a dollar previously.
At the Bureau De Change (BDC) segment, the naira closed at N385 against the dollar, CBN rate, while the Pound Sterling and the Euro closed at N564 and N510 respectively.
Dealers from Afrinvest (West) Africa Limited however said Foreign Exchange (FX) rate remained volatile in the parallel market, attributable to the Apex Bank’s decision to maintain status-quo on Deposit Money Banks suspension (except FBN Limited) from selling dollars to bureau-de-change operators, the restrictions on use of naira debit cards for FX transactions as well as Travelex’s inability to conveniently fulfill all US dollar demands.
Thus, the Naira/Dollar exchange rate at the parallel market opened the week at N455.00/US$1.00 but depreciated to N470.00/US$1.00 by midweek before firming up slightly to N465.00/US$1.00 on Friday last week.
As a result, the federal government is issuing treasury bills to fund the budget deficit, manage banking system liquidity and curb rising inflation.
It would be recalled that the largest economy in Africa has deficit of N2.2 trillion in its 2016 budget, and expect about N900 billion from local borrowing.