Naira Falls to N1,030/$ On Monday Despite CBN Moves to Clear FX Backlogs

Despite the naira gaining against the dollar last week, it’s been reported that on Monday the naira fell to N1,030/$ in the parallel market making its gain last week futile.

Naira lost N80 or what we can say is an 8.42% decline of the local currency when compared to the figure (N950) it settled last week Friday.

However, this is the first time the naira has fallen since the CBN began settling its FX backlog starting last week.

Currency Traders also known as the Bureaux De Change operators reported that the naira was selling against the dollar between the ranges of N990 to N1,030/$.

The PUNCH reports that a trader who gave his name as Awolu said, “The dollar is N995 if you want to sell. If you want to buy from me, it is N1,020.” Another trader, Kadri, added, “The dollar is N960 if you want to sell. If you want to buy, it is N990.”

Aminu Gwadabe, President of the Association of Bureaux De Change Operators of Nigeria, said the dollar rose against the naira because people who had bought it at a higher price are resisting its fall following the CBN move last week.

It was last week that the apex bank began clearing the payment of outstanding matured forex forwards owed to various banks.

This development was expected to increase liquidity in the forex market following the decline of the naira in recent weeks. The Minister of Finance, Wale Edun, said that the amount owed was around $6.7 billion.

The BDC President said with the commencement of the clearing of FX backlogs, the naira gained about N220 at the closing week at the parallel market to settle at N950/$ last week. Currently, the naira has lost against the dollar to settle at N1,030/$ in the parallel market.

Gwadabe said,

• Speculators are always looking at elements of sustainability. Once they sense that the injection is not continuous, they begin to react. They begin to react. It is the reaction of the market we are witnessing. Also, there is resistance. Some people bought at a higher price that this does not favour. People are not willing to take further losses.

• The only way we can continue to achieve this rate is by continuing to send confidence to the market. Tell the market that another window is opening, and boost liquidity. The parallel market is where the retail end is. And as of now, there is no information as to how liquidity will come into that sector. All we have is that BDCs will be included to advance the official foreign exchange market. We cannot wait in the FX market.

On Monday, the naira closed at the official market at N802.02/$, which signifies a 3.6% decline from N780.23/$ recorded last Friday. This finding was made on the FMDQ OTC Securities Exchange.