Sustained forex interventions bolster rates

The sustained foreign exchange (forex) intervention has bolstered rate stability, with parallel market oscillating around N363 and N361 per dollar for more than five weeks.

Last week, transactions ended at N363 per dollar at the parallel market; N360 at the licensed bureau de change; and N360.10 per dollar at the popular Investors’ and Exporters’ Window.

Since the turn of the year, the Central Bank of Nigeria has sustained its intervention in the forex market, in its bid to maintain the current stability and liquidity in the market.

The move has been bolstered by the sustained rally in oil prices, which touched a high of $70.26 last week, as well as the improvement in external reserves at near $41 billion.

At the beginning of the week, CBN offered $100 million via Special Wholesale Interventions for Spot and Forward sales.

Consequently, the CBN Spot rate opened the week at N305.8 per dollar, but appreciated five kobo by mid-week, before eventually closing the week at N305.70 per dollar translating to a 10 kobo week-on-week appreciation.

Similarly, at the Investors’ and Exporters’ (I&E) segment, the domestic currency appreciated as the NAFEX rate also improved 10 kobo week-on-week to settle at N360.10 per dollar on Friday.
Analysis of daily trading activity showed the spread between the daily high and low contracted all week, from N4.85 per dollar on Monday to N3.50 per dollar on Thursday.