Naira Surges as CBN Intervenes in Interbank Market

The naira pared some its previous day’s loss on the interbank forex market as it appreciated to N314.75 to the dollar on Thursday, stronger than the N317 to the dollar it closed on Wednesday.

The positive momentum displayed by the nation’s currency was attributed to an intervention by the Central Bank of Nigeria (CBN), which sold dollars to boost liquidity and help the naira to strengthen against the greenback.

The central bank asked some traders to bid for $1.5 million each, Reuters reported, adding that the Bank had been selling hard currency since this week.

A total of $6.27 million traded on Thursday.
However, on the parallel market, the naira climbed marginally to N395 to the dollar, up from the N394 to the dollar it closed the previous day.

The central bank had intervened in the interbank forex market on Tuesday to help support the naira after it hit an all-time low of N350 to the dollar in thin volume on that day.

The naira has been under pressure since the central bank floated the currency in June to allow it trade freely on the interbank market. The currency has been hit by a plunge in oil prices, Nigeria’s economic mainstay, which caused foreign investors to flee bond and equities markets.

The central bank last month told international money transfer operators to pay dollar proceeds from customer transfers into local commercial banks in naira, while selling the dollars themselves to bureaux de change (BDC) outlets.

On Tuesday the bank pegged the dollar transactions which banks can carry out with BDCs at $30,000 per week and set a margin for the banks to sell dollar to currency outlets at not more than 1.5 per cent over the rate at which they bought.

It hopes the move will help narrow the gulf between the official and black market rates and boost dollar liquidity, traders say.

The central bank set a margin of two percent over the rate at which BDCs sourced dollars from banks as resale premium to customers and pegged BDC disbursement at $5,000 per transaction to cover travel allowance, medical bills and school fees.

Meanwhile, the CBN yesterday advised interested International Money Transfer Operators (IMTOs) to apply for licence.

The central bank in a statement last night said it came to its notice that, in spite of its transparency in the licensing of IMTOs in Nigeria, some persons have continued to allege that the Bank has stopped the licensing of interested IMTOs in the country.

“The CBN wishes to state, unequivocally, that it has not foreclosed the licensing of interested players in the IMTO space in Nigeria. Therefore, interested applicants are required to forward their requests for licensing to the Director, Trade and Exchange Department of the CBN, in line with the CBN Guidelines on International Money Transfer Services in Nigeria (2014), which among other things, specifies the minimum technical and business requirements for various participants in the international money transfer services industry in Nigeria. The aforementioned guidelines can be downloaded from the website of the Central Bank of Nigeria, it added, saying it remains committed to providing an enabling environment for international money transfer services in Nigeria.