CBN Eases Dollar Pressure With $86.6m Sale as Naira Sells for New Price in Parallel Market

• The naira remained stable at the official FX market after the CBN injected $86.6 million to ease demand pressure, closing at N1,548.52 per dollar
• While it appreciated slightly over the week at the NAFEM market, the gap between official and parallel rates widened, with the latter closing at N1,605 per dollar
• Economists predict the naira may maintain a narrow range if corporate and FPI inflows persist, though demand pressures could limit further gains

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

Following the Central Bank of Nigeria’s (CBN) sale of over $86.6 million last week, which eased market demand pressure, the naira remained stable at the official foreign exchange (FX) market on Monday, 23 June.

According to data from the CBN, the naira experienced a slight decline of 0.07 percent at the close of trading, with the dollar quoted at N1,548.52. This represents a depreciation of N1.16 from the N1,547.36 it closed at on Friday, 20 June, at the Nigerian Foreign Exchange Market (NFEM).

Exporters accounted for 10.87 percent of the inflows, non-bank corporates contributed 13.36 percent, and other sources made up 0.17 percent. The CBN intervened by injecting $86.6 million into the market last week to alleviate pressure on FX demand.

On a weekly basis, the naira gained N1.99 or 0.13 percent at the NAFEM market, closing at N1,547.36 per dollar. Exporters, non-bank corporates, and foreign portfolio investors (FPIs) contributed to the currency’s appreciation. During the week, the naira peaked at N1,544.63 to the dollar.

The spread between official and parallel market rates continues to widen. The naira depreciated by 0.31% on the parallel market, closing at N1,605 per dollar.

CBN data showed that gross foreign reserves stood at $37.71 billion as of Thursday, reflecting a decline of $219.56 million or 0.58% from the previous week.

Looking ahead, economists expect that if FPI inflows and supply from corporates and exporters persist, the naira is likely to trade within a narrow band with a slight appreciation bias. However, continued demand pressures could limit further gains.

Market analysts are also monitoring the growing disparity between official and parallel market rates, which may indicate a segmentation within the FX market.

Rewane predicts new naira against US dollar

Legit.ng reported that Bismarck Rewane, the Chief Executive Officer (CEO) of Financial Derivatives Company, has projected that the naira will trade between N1,600 and N1,650 in the official foreign exchange market in June and July.

Bismarck Rewane, the Chief Executive Officer (CEO) of Financial Derivatives Company, has projected that the naira will trade between N1,600 and N1,650 in the official foreign exchange market in June and July.

He cited data that indicated effective measures by the Central Bank of Nigeria to manage money supply growth, which peaked at 78% in May last year, as the basis for his projection about the Nigerian currency.

Source: Legit.ng