Naira continues recovery at official market, as CBN defence depletes foreign reserves by 2.4%

The Naira maintained its strong performance against the US dollar in the official market on Wednesday, making it two days in a row of positive trade.

According to data from FDMQ securities, the Naira gained 10 kobo or 0.02 percent to close at N413.18/$1 at the investors and exporters window from N413.28/$1 the previous day.

In fact, traders at the spot market went as far as looking to buy the U.S dollars at N404.

This happened as the market turnover increased by 14.5 percent or $29.07 million to $229.72 million from $200.65 million recorded the day before.

While at the Black Market, Naira continued to depreciate as currency traders on Lagos streets exchanged the Nigerian currency for the dollar for more than N570 on Wednesday.

Ripples Nigeria spoke with merchants in Surulere, Ikeja, and Ikotun, all of whom reported prices in excess of N570 leaving the gap between the official and unofficial market at above N156.

CBN gets boost to defend Naira

The Central Bank of Nigeria efforts to defend Naira received a major boost on Tuesday after the Debt Management Office successfully secured $4 billion borrowed from local and international investors through the sale of Eurobond.

Read also: Naira’s slide against dollar unacceptable – PGF chief

Upon receipt of the funds this will see Nigeria’s external reserves increase from the $35.82 billion as at Monday, September 9, 2021 to over $39 billion.

In fact, when Nigeria receives the $3.5 billion Special Drawing Funds from the International Monetary Fund, Nigeria’s external reserves may exceed $40 billion for the first time since November 2019, providing the CBN with a powerful arsenal to defend the currency fighting to survive due to demand pressure.

CBN in its most recent economic report had revealed that in the month of April its intervention at the foreign exchange markets resulted to the depletion of reserves by 2.4 per cent to US$34.29 billion.

CBN noted that it had to step into the forex market, due to the decline in inflow, constrained foreign exchange market liquidity and exacerbated demand pressure.

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