Banks Releases New Exchange Rate As Naira Weakens, FX Reserves Hit $3bn
- Nigerian currency has recorded a mixed performance in the official and unofficial markets
- The naira strengthened at banks, but in the Nigerian foreign exchange market, it fell against the dollar
- There is good news for the naira as Nigeria’s external reserves rise above $48.5 billion
Legit.ng journalist Dave Ibemere has experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The naira at the foreign exchange (FX) markets on Wednesday, February 18 recorded a slight gains in commercial banks and the parallel market, but fell in the official market against major currencies.
Source: Getty Images
Check on GTBank’s FX counter saw the Naira gain N16 against the U.S. dollar to close at N1,347/$1, compared with N1,363/$1 the previous day.
In the parallel market, the Naira strengthened by N20 to N1,370/$1 from Tuesday’s N1,390/$1.
Naira fell at NFEM window
On the Nigerian Foreign Exchange Market (NAFEM), the Central Bank of Nigeria revealed that the naira depreciated slightly by N2.15, or 0.16%, to N1,338.11/$1 from N1,335.96/$1.
While against other major currencies, it fell by N10.27 to N1,817.02/£1 and by N5.88 to N1,585.12/€1.
Market observers attributed the relative stability to Nigeria’s rising external reserves, which climbed above $48.5 billion as of February 17.
The new reserve level provides the Central Bank of Nigeria (CBN) with additional capacity to support the currency and narrow the gap between official and parallel market rates.
The difference between the official and black market exchange rate has reduced to about N32 from N92 recorded last week.
Source: Getty Images
BDC to buy dollars from banks
Despite these gains, Bureau De Change (BDC) operators have yet to resume dollar purchases from commercial banks, a week after the CBN reopened the Nigerian Foreign Exchange Market to them.
Under new guidelines, licensed BDCs may buy foreign exchange through authorised dealer banks up to a maximum of $150,000 per week, subject to strict regulatory compliance and mandatory reselling of unutilised foreign exchange within 24 hours.
The central bank has also capped cash settlements at 25% of total transaction values to encourage transparency and reduce cash-based FX dealings in the retail market.
Aminu Gwadabe, president of Association of Bureaux De Change Operators of Nigeria spoke to Legit.ng recently on the new CBN directive:
He said:
"The new directives will increase dollar liquidity at the critical retail end of the market and provide a reliable source of dollars to operators.
"In a similar vein, they will usher in positive market sentiment and boost investor confidence in the subsector and Nigeria’s financial industry.
"I also want to use this medium to call on our members to ensure strict compliance with all prudential and AML/CFT obligations.
"Above all, they will enhance transparency, accountability, and price discovery in the foreign exchange market."
CBN moves to replace naira
Legit.ng had earlier reported that the Central Bank of Nigeria (CBN) has joined other West African central banks in advancing plans to launch a single regional currency, the Eco, by 2027.
The new currency will be modelled after the euro system adopted by the European Union.
Governors from 12 member states of the Economic Community of West African States (ECOWAS) are currently aligning technical, fiscal and monetary frameworks required to operationalise the long-delayed currency project.
Source: Legit.ng
