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 $55/bl and an exchange rate of N450-500/$.”

Up Next

CBN Pumps Fresh $180m into Forex Market

Don't Miss

Experts Predict Further Gain as Naira Hits 445/Dollar

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.

Comments

Forex

Yen Hits 34-Year Low Against Dollar Despite Bank of Japan’s Inaction

Published

2 days ago

April 26, 2024

Samed Olukoya

The Japanese yen plummeted to a 34-year low against the US dollar, sending shockwaves through global financial markets.

Despite mounting pressure and speculation, the Bank of Japan (BOJ) chose to maintain its key interest rate.

The yen’s relentless slide, extending to 0.7% to 156.66 against the dollar, underscores deep concerns about Japan’s economic stability and the efficacy of its monetary policies.

BOJ Governor Kazuo Ueda’s remarks at a post-meeting news conference did little to assuage fears as he acknowledged the impact of foreign exchange dynamics on inflation but downplayed the yen’s influence on underlying prices.

Investors, already on edge due to the yen’s dismal performance this year, are now bracing for further volatility amid speculation of imminent intervention by Japanese authorities.

The absence of decisive action from the BOJ has heightened uncertainty, with concerns looming over the potential repercussions of a prolonged yen depreciation.

The implications of the yen’s decline extend far beyond Japan’s borders, reverberating across global markets. The currency’s status as the worst-performing among major currencies in the Group of Ten (G-10) underscores its significance in the international financial landscape.

Policymakers have issued repeated warnings against excessive depreciation, signaling a commitment to intervene if necessary to safeguard economic stability.

Finance Minister Shunichi Suzuki reiterated the government’s readiness to respond to foreign exchange fluctuations, emphasizing the need for vigilance in the face of market volatility.

However, the lack of concrete action from Japanese authorities has left investors grappling with uncertainty, unsure of the yen’s trajectory in the days to come.

Market analysts warn of the potential for further downside risk, particularly in light of upcoming economic data releases and the prospect of thin trading volumes due to public holidays in Japan.

The absence of coordinated intervention efforts and a clear policy stance only exacerbates concerns, fueling speculation about the yen’s future trajectory.

The yen’s current predicament evokes memories of past episodes of currency turmoil, prompting comparisons to Japan’s intervention in 2022 when the currency experienced a similar downward spiral.

The prospect of history repeating itself looms large, as market participants weigh the possibility of intervention against the backdrop of an increasingly volatile global economy.

As Japan grapples with the yen’s precipitous decline, the stakes have never been higher for policymakers tasked with restoring stability to the currency markets. With the world watching closely, the fate of the yen hangs in the balance, poised between intervention and inertia in the face of unprecedented challenges.

Naira

Dollar to Naira Black Market Today, April 25th, 2024

As of April 25th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,300 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

3 days ago

April 25, 2024

Samed Olukoya

Naira to Dollar Exchange- Investors King Rate - Investors King

As of April 25th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,300 NGN in the black market, also referred to as the parallel market or Aboki fx.

For those engaging in currency transactions in the Lagos Parallel Market (Black Market), buyers purchase a dollar for N1,260 and sell it at N1,250 on Wednesday, April 24th, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate declined when compared to today’s rate below.

This black market rate signifies the value at which individuals can trade their dollars for Naira outside the official or regulated exchange channels.

Investors and participants closely monitor these parallel market rates for a more immediate reflection of currency dynamics.

How Much is Dollar to Naira Today in the Black Market?

Kindly be aware that the Central Bank of Nigeria (CBN) does not acknowledge the existence of the parallel market, commonly referred to as the black market.

The CBN has advised individuals seeking to participate in Forex transactions to utilize official banking channels.

Black Market Dollar to Naira Exchange Rate

Buying Rate: N1,300
Selling Rate: N1,290

Naira

Dollar to Naira Black Market Today, April 24th, 2024

As of April 24th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,260 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

3 days ago

April 24, 2024

Samed Olukoya

As of April 24th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,260 NGN in the black market, also referred to as the parallel market or Aboki fx.

For those engaging in currency transactions in the Lagos Parallel Market (Black Market), buyers purchase a dollar for N1,250 and sell it at N1,240 on Tuesday, April 23rd, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate declined slightly when compared to today’s rate below.

This black market rate signifies the value at which individuals can trade their dollars for Naira outside the official or regulated exchange channels.

Investors and participants closely monitor these parallel market rates for a more immediate reflection of currency dynamics.

How Much is Dollar to Naira Today in the Black Market?

Kindly be aware that the Central Bank of Nigeria (CBN) does not acknowledge the existence of the parallel market, commonly referred to as the black market.

The CBN has advised individuals seeking to participate in Forex transactions to utilize official banking channels.