Forex

CBN’s Lending to Banks Rises to N1.6tr

Published

7 years ago

February 28, 2017

Forex: CBN’s Lending to Banks Rises to N1.6tr

BankS’ borrowing from Central Bank of Nigeria (CBN) rose sharply to N1.6 trillion last week, triggered by demand for funds to participate in the special foreign exchange auctions conducted by the apex bank.

Under the CBN forex rule, banks are to provide the Naira equivalent of dollar purchases from the CBN. During the week, the CBN conducted two 60-days forwards sale of $600 million to the banks. This triggered intense demand and acute scarcity of funds in the interbank money market, which prompted banks to besiege the Standing Lending Facility (SLF) of the CBN to borrow the Naira required to fund their dollar purchases.

Average Daily Borrowing

Consequently, banks borrowing shot up by 98 per cent to N1.6 trillion last week, from N821.4 billion the previous week. Similarly, average daily borrowing through the SLF jumped to N321 billion last week from N205 billion the previous week.

Investigation reveal that most of the borrowing occurred on Wednesday, during which banks took N433 billion to fund the $370 million sold on Tuesday by the CBN.

The apex bank had offered $500 million 60-days future on Tuesday. According to a CBN official who confirmed this development to Financial Vanguard under condition of anonymity, most of the banks did not have the Naira to buy the dollars offered by the apex bank, hence only $370 million was sold that day. A similar situation re-occurred on Thursday when banks borrowed N392 billion to participate in the $230 million sold by the apex bank that day.

Meanwhile, amount of idle cash (liquidity) in the interbank money market fell by 74 per cent during the week, in response to the intense demand for funds triggered by the CBN dollar sales. From N175.29 billion on Monday, market liquidity fell steadily closing the week at N45.65 billion. This was despite inflow of N412 billion comprising N198 billion through matured treasury bills and N214 billion from statutory allocation funds.

This prompted wide volatility of interbank interest rates during the week, with interest rate on Overnight borrowing climbing to 200 per cent on Thursday from 17 per cent the previous week, before dropping to 175 per cent at the close of business on Friday.

However, the CBN dollar sales halted the depreciation of the Naira in the parallel market, where it posted its biggest weekly appreciation against the dollar last week. Market survey revealed that the Naira exchange rate in the parallel market dropped from N520 per dollar the previous week to N460 per dollar at the close of business on Friday.

Analysts however project that the Naira appreciation may be short-lived saying that the Naira might lose some of the appreciation recorded last week.

“Parallel market will appreciate towards N460 per dollar before bouncing back to N480 per dollar in a cobweb movement,” analysts at Financial Derivatives Company projected.

Also analysts at Afrinvest Plc, a Lagos based investment firm stated: “It is hard to make an exact call on direction of rate, but it is unlikely the parallel rate will breach the N500 per dollar mark again in the shorter term as a more dollar liquid CBN will not shy from further interventions.

Yet, our medium term conviction remains that maintaining the interbank rate at current peg (without implementing deeper reforms required) will lead to deterioration in current account as more demand surfaces. Hence, there is still a need to address the FX liquidity challenge appropriately and we reaffirm our view that increased flexibility will be needed in order to allow restore investor confidence and boost autonomous FX supply.”

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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 Rate Reaches ₦1,380 Today, May 3rd, 2024

US dollar to Nigerian Naira exchange rate as of May 3rd, 2024 at the black market stood at 1 USD to ₦1,380

Published

13 hours ago

May 3, 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 3rd, 2024 stood at 1 USD to ₦1,380.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,350 and sold it at ₦1,340 on Thursday, May 2nd, 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 black market

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

Buying Rate: ₦1,380
Selling Rate: ₦1,370

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.

Naira

Dollar to Naira Black Market Today, May 2nd, 2024

As of May 2nd, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,350 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

23 hours ago

May 2, 2024

Samed Olukoya

As of May 2nd, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,350 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 N1,310 and sell it at N1,300 on Monday, April 29th, 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: N1,350
Selling Rate: N1,340

Forex

Yen’s Plunge Persists Despite Japan’s Late New York Trading Intervention

Published

1 day ago

May 2, 2024

Samed Olukoya

Japan’s attempts to shore up the yen faced yet another setback as the currency continued its downward spiral despite a late intervention in New York trading.

Despite efforts by Japanese authorities to stem the yen’s decline, traders remained unfazed, indicating a growing skepticism towards the efficacy of such measures.

The yen, which had initially weakened as much as 1.1% against the dollar during Asia trading, stubbornly clung to its downward trajectory, inching closer to levels seen before the suspected intervention.

Speculations ran rife among traders regarding Japan’s involvement in the currency market after witnessing abrupt fluctuations in the yen’s value during the final stretch of the US trading session.

This recent development underscores a deepening challenge for Japanese policymakers grappling with the yen’s persistent depreciation.

Despite their best efforts, the market sentiment appears to be increasingly immune to intervention tactics, casting doubts on the effectiveness of such measures in the long run.

Shoki Omori, chief desk strategist at Mizuho Securities Co., weighed in on the situation, remarking, “Japan’s finance ministry likely intervened but couldn’t break 152, where investors used to be cautious.”

He further noted, “Now that authorities are seen as having stepped in for a second time but gave the impression that they cannot stop the yen cheapening trend alone, market participants will likely feel more comfortable to short yen.”

The prevailing sentiment among traders suggests a growing consensus that Japan’s interventions may be insufficient to halt the yen’s depreciation trend.

Despite the authorities’ concerted efforts, the currency’s plunge persists, signaling a broader challenge for policymakers in navigating the complexities of the global currency market.

As the yen’s decline continues unabated, market participants remain on high alert, bracing for further volatility in the days ahead.

The inability of intervention measures to reverse the currency’s downward trajectory raises questions about the effectiveness of traditional policy tools in an increasingly interconnected and unpredictable financial landscape.

In the face of mounting challenges, Japanese authorities may find themselves compelled to explore alternative strategies to address the yen’s persistent weakness.

Whether through unconventional policy measures or coordinated efforts with global counterparts, finding a sustainable solution to stabilize the yen remains a pressing priority for policymakers amid evolving market dynamics.