September 23, 2020
  • September 23, 2020
  • Home
  • Top News
  • CBN resumes dollar sales to foreign portfolio investors as naira gains
Nigeria naira rate

CBN resumes dollar sales to foreign portfolio investors as naira gains

By on September 2, 2020 0 116 Views

By Oludare Mayowa

The Central Bank of Nigeria (CBN) on Tuesday sold dollars to some portfolio investors who are eager to repatriate their funds out of the country, boosting dollar liquidity on the Investors’ and Exporters’ (I&E) window, currency traders said.
Though the amount of dollar sold by the regulator was not disclosed, it was learnt that the sales increased the level of liquidity in the market and helped the naira to appreciate against the dollar on the window.

Foreign Exchange

Dollar liquidity on the I&E window closed at $58.48 million on Tuesday while the naira closed flat at N286 per dollar at the window.

Many foreign portfolio investors have since March been waiting on the CBN to provide dollars in the market to enable them to exit the country due to the economic outlook and the collapse in yields on fixed income assets, but the regulatory bank had hurt dollar sales as part of measures to conserve its reserves.

RELATED STORY: Nigeria’s Naira Appreciates To N430/$ On Parallel Market

Traders said the backlog of forex demand by the offshore investors stood around $2.5 billion last week before the CBN dollar sales on Tuesday.
The CBN is also expected to restart dollar sales to the bureau de change operators on Monday, September 7, as the regulator moves to ease dollar liquidity and help the local currency breathe.

The local currency had been under pressure from both speculators and other end-user due to uncertainty over dollar sales by the CBN, causing the naira to depreciate rapidly on all segments of the forex market.

The naira had depreciated on the parallel market to hit three years low of N480 to the dollar before it gained on Tuesday to N430 per dollar on the announcement that the CBN will resume dollar sales to retail outlets.

Analysts said the resumption of dollar sales to bureau de change, coming few days when Nigeria is expected to reopen international flights for travelers could lead to a further moderation in the forex market in the parallel market.

READ ALSO: UBA H1 Profit Before Tax Declines 19%, Declares Dividends

“The volatility in the forex market was basically driven by lack of dollar liquidity in the market, resulting in some endusers mopping up the available fund in the market at a mark-up rate,” one trader told Global Financial Digest.

“The pronouncement of the resumption of (dollar) sales to bdcs is the policy that broke the camel back,” President of the Bureau de Change Association of Nigeria, Aminu Gwadabe told Global Financial Digest.

“The CBN – Central Bank of Nigeria – peg of bdcs selling rates to #386/$ is a benchmark for a unified exchange rate.
“And hoarders and speculators have to operate within that band and the reason for the offloading of foreign currencies in the market,” Gwadabe said.

The CBN had devalued the local currency twice this year, first in March and the second one was done in July as part of measures to align rates on all on all the segments of the forex markets in line with the World Bank conditions for granting Nigeria a $1.5 billion budget support facilities.

Leave a comment

Your email address will not be published. Required fields are marked *

Sign For NewslettersFor News Updates Around The Globe!