The nation’s currency, the naira, on Wednesday depreciated by 50 kobo at the inter-bank market despite foreign exchange auction by the Central Bank of Nigeria (CBN).
After trading on Wednesday, the local currency closed at N183.60k/$ as against N183.10k/$ the previous day, according to the data obtained from the Financial Markets Dealers Quotations (FMDQ).
The CBN offered a total of $200 million but sold a total of 249.4 million to some deposit money banks at its twice weekly Retail Dutch Auction System (RDAS).
Kunle Ezun, analysts at Ecobank Nigeria explained to BusinessDay that there is no cast in stone to the amount of dollar sale at the inter-bank foreign exchange market. He said the CBN can sell above or below the demand.
With Wednesday sale, the CBN has sold about $489.49 million at the bi-weekly RDAS window. However, at the parallel market segment, naira remained stable at N191.50k/$.
Naira has been gaining against the dollar since the resumption of foreign exchange auction at the Retail Dutch Auction System (RDAS) after the festive holidays by CBN. But only Tuesday and Wednesday that naira depreciated following CBN’s measure to curtail speculation.
The central bank on Tuesday said commercial banks can hold 0.1 percent of their shareholders’ funds in foreign currency, reversing a directive enforced last month to stop banks from dealing in hard currency on their account.
The central bank devalued the naira two months ago, and in December tightened trading rules to try to curb speculation against the currency, slowing trading to a trickle.
The devaluation of its target band by 8 percent to N160-N176 against the dollar was meant to halt the slide in foreign reserves. But the naira has traded well outside that band, and reserves are still falling.
Source : BusinessDay