Naira appreciates 0.27% at parallel market, slumps 0.02% at interbank as CBN injects $418m Tuesday

The naira Tuesday had mixed fortunes at the foreign exchange market, appreciating by 0.27 percent at the parallel and recording marked gains at the Investors and Exporters forex window.

It however slumped 0.02 percent at the interbank window against market expectations of further strengthening with the CBN injection of $418 million into the market.

At the Investors and Exporters window, the naira opened at N373.19 to the dollar, closing stronger at N372.71 to the dollar. The local currency also appreciated at the parallel/ BDC segment by 0.27 percent to close at N367 to the dollar.

At the interbank window the naira’s value fell by 0.02 percent to close at N305.70 to the dollar.

Expectations of strengthening were high with the news of the $418 million injection, with many forecasting the naira to exchange at an average of N363/$1 at the BDC segment of the market.

Figures obtained from the CBN on Tuesday indicate that the retail segment of the market received the highest intervention with a total of $226 million, followed by the wholesale window that received an allocation of $100million. The Small and Medium Enterprises (SMEs) window received a boost of $50 million while the invisibles segment, comprising Business/Personal Travel Allowances, school tuition, medicals, etc. was allocated the sum of $42 million to meet the demands of customers.

Isaac Okorafor, spokesperson of the CBN is reported to have confirmed that the volume of currency trading in the Investors’ & Exporters’ (I&E) FX Window had cumulatively hit heights of $2.2 billion since the CBN introduced it on Friday, April 21, 2017 to boost liquidity in the forex market and ensure timely execution and settlement for eligible transactions.

He specifically expressed confidence that the interventions will continue to guarantee stability in the market and ensure availability to individuals and business concerns.

It will be recalled that the CBN only on Monday, June 12, 2017, injected the sum of $413.5 million into the inter-bank market in its unrelenting bid to guarantee liquidity in the market as well as shore up the international value of the naira.

Analysts see the increase in the volume of transactions in the Investors’ & Exporters’ (I&E) segment as a positive sign of the return of confidence in the financial markets as clearly demonstrated by the activities in the stock market.

According to them, the sentiments of investors had strengthened since the CBN established the I&E FX window in April, which they agreed had ensured greater flexibility in forex rate determination. They, however, urged the CBN to continue its march towards the convergence of rates.