Forex

As CBN Pumps Another $221m, Analysts Expect Dollar to Slide to N400-N425

Published

7 years ago

February 27, 2017

As CBN Pumps Another $221m, Analysts Expect Dollar to Slide to N400-N425

As part of efforts to sustain its defense of the naira, the Central Bank of Nigeria (CBN) on Thursday sold $221,371,218.04 to banks in its second special wholesale intervention forwards since the new foreign exchange (FX) policy actions were announced a week ago.

A breakdown of the amount sold by the CBN showed that it auctioned $162,850,000 to 10 banks in a transaction with 30 days tenor, while six banks participated in a separate auction with 60 days tenor in which $58,521,217.04 was sold.

Owing to the new measures introduced by the central bank last week, the naira which had fallen to as low as N525/$ penultimate Friday, strengthened remarkably by N75 in just five days, to close at N450/$ last Friday.

With improved FX liquidity, some market analysts were cautiously optimistic yesterday that the naira could climb to N400-N425 to a dollar in the coming days.

Should this happen, the CBN would meet its objective of closing the gap between the interbank and parallel market rates.

The acting Director, Corporate Communications Department, CBN, Mr. Isaac Okorafor, said the CBN’s intermediation in the FX market through the wholesale interventions was aimed at easing the pressure on Nigerians who need to meet obligations that fall under visible and invisible transactions.

While expressing optimism that the wholesale intervention of the CBN would substantially ease pressure on the FX market, Okorafor said the CBN would continue to with the interventions based on qualified bids from banks on the requests of their customers.

He reiterated that the Bank was more than ready to support the interbank market by ensuring liquidity and transparency to guarantee efficiency in the FX market.

Renaissance Capital (Rencap) Limited, in a note at the weekend, also confirmed that rising oil prices and a deal with the Niger Delta militants had addressed both the oil price and volume challenges that hurt the country so much in mid-2016.

“FX reserves have risen over 20 per cent to $29 billion,” which Rencap said gave the CBN the comfort to announce changes to its FX policy and injected more dollars into the local market.

It added: “We think N450-500/$ would attract investors even without $20 billion of cheap International Monetary Fund (IMF)-led financing.

“One of our Real Effective Exchange Rate (REER) models – the 22-year model which corresponds to a period when oil averaged $55/bl – implies fair value for the naira at N370/$, which via inflation should become N400/$ by end-2017.

“At the parallel rate of NGN500/$, Nigeria has the cheapest currency in Africa, and even at NGN450/$ it would still rival Egypt at EGP15.8/$ (the third cheapest in Africa).

“Given this, a full float of the currency would likely attract billions of dollars to Nigeria, similar to how Egypt has attracted $9 billion since its float in November.

“The vast majority of Nigerian and foreign potential investors ignored Nigeria in 2016 due to exchange rate difficulties, but rising oil prices and production (double the 0.9mbpd 2016 lows) suggest some opportunities may emerge in 2017.

“A best-case scenario is very unlikely, but some frontier investors may well be able to find value in the country at an oil price of $55/bl and an exchange rate of N450-500/$.”

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Naira

Black Market Dollar to Naira Exchange Rate Today 13th May 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 13th, 2024 stood at 1 USD to ₦1,500.

Published

7 hours ago

May 13, 2024

Samed Olukoya

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 13th, 2024 stood at 1 USD to ₦1,500.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,470 and sold it at ₦1,460 on Friday, May 10th, 2024.

This indicates a decline in the Naira exchange rate compared to the current rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in the black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

Buying Rate: ₦1,500
Selling Rate: ₦1,480

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

Forex

Zimbabwe Implements Strict Rules: $14,782 Fine for Violating Official Exchange Rate

Published

3 days ago

May 10, 2024

Samed Olukoya

Zimbabwe, in a bid to stabilize its currency and clamp down on black-market trading, has introduced stringent regulations to penalize individuals and companies found violating the official exchange rate of its new currency, the ZiG.

Under the new rules announced by Finance Minister Mthuli Ncube, offenders will face a hefty fine of 200,000 ZiG or $14,782.

The move comes as the government seeks to enforce the sole use of the official exchange rate, which is determined daily by the Reserve Bank of Zimbabwe.

The decision to impose such a significant penalty underscores the seriousness with which Zimbabwean authorities are approaching the issue of currency stability.

By cracking down on those who flout the official exchange rate, the government aims to curb the proliferation of parallel markets and ensure the orderly functioning of the economy.

Previously, retailers were required to price their goods within 10% of the official exchange rate to prevent excessive profiteering.

However, this regulation has now been scrapped as it was deemed ineffective in curbing informal trading and maintaining the value of the currency.

The ZiG, introduced on April 5 as a successor to the Zimbabwean dollar, represents the country’s sixth attempt to establish a stable local currency.

Backed by 2.5 tons of gold and approximately $100 million in foreign currency reserves held by the central bank, the ZiG is intended to restore confidence in the nation’s monetary system.

Despite these efforts, the ZiG has faced challenges since its launch, including fluctuations in its value against major currencies.

Trading at 13.53 to the dollar as of Thursday, the currency experienced a record low of 13.67 to the dollar earlier in the week, highlighting the volatility inherent in Zimbabwe’s currency market.

The introduction of strict penalties for violating the official exchange rate reflects Zimbabwe’s determination to maintain control over its currency and stabilize its economy.

However, it remains to be seen how effective these measures will be in addressing the underlying issues contributing to currency instability and informal trading in the country.

Naira

Black Market Dollar to Naira Exchange Rate Today 9th May 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 9th, 2024 stood at 1 USD to ₦1,450.

Published

4 days ago

May 9, 2024

Samed Olukoya

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 9th, 2024 stood at 1 USD to ₦1,450.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,440 and sold it at ₦1,430 on Wednesday, May 8th, 2024.

This indicates a decline in the Naira exchange rate compared to the current rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.