Naira Gained N15 Against US Dollar Ahead of Dollar Sale

The Nigerian Naira gained N15 against the United States dollar following the Central Bank of Nigeria’s announcement that it would commence the sale of forex to the Bureau de Change Operators across the country on September 7.

The local currency had plunged to as low as N480 against the US dollar in recent weeks due to the persistent dollar scarcity. However, the CBN decision to resume the sales of forex to the BDCs bolstered the value of the Naira on the black market as speculators and hoarders were forced to bring out their US dollars.

The Naira appreciated by N15 from N480 it traded against the US dollar two weeks ago to N465 on the black market on Monday.

Against Great Britain Pounds it gained N10 to N605. While it gained N10 against the European common currency to N545, up from N555 it exchanged last week.

Investors King’s Note: The central bank planned to sell $10,000 per week to each of the 3,000 registered bureaus de change operators. Meaning, the apex bank planned to flood the market with $30 million per week and $120 million per month.

This, we expect to temporarily ease dollar scarcity but we doubt the apex bank would be able to sustain this intervention given the weak foreign reserves and low oil price.

Therefore, the economic outlook remained uncertain, especially with Africa’s largest economy expected to plunge into recession in the third quarter and unemployment rising to as high as 27.1 percent with inflation at 12.82 percent.