The
naira appreciated against the United States dollar at the parallel market on
Monday to 217, from 221 recorded on Friday.
The
naira rose on the back of weak demand for the dollar at the foreign exchange
markets.
Forex
traders linked this to an improved dollar liquidity occasioned by the sustained
sales of the greenback by the Central Bank of Nigeria.
Reacting
to the rising fortune of the local currency, the Acting President, Association
of Bureau De Change Operators, Alhaji Aminu Gwadabe, said, “The market has
started feeling the effect of the dollar sales by the central bank in the last
two weeks and tight measures introduced to prevent cross boarder currency
trafficking.”
The
CBN had increased the frequency of dollar sales to the BDC operators two weeks
ago to twice-weekly from the usual once a week previously in a move meant to
increase liquidity in the market and support the local currency.
Traders
said bank customers were no longer willing to hold dollars after the central
bank banned dollar cash deposits into domiciliary accounts.
“We
expect to see more rallies in the market if the central bank could sustain its
support for the naira,” Harrison Owoh, a bureau de change operator said,
Reuters reported.
The
naira was unchanged at the official interbank market at 197 to the dollar,
where the CBN has maintained a tight control by pegging it to the rate of 197
to the dollar
The
naira had weakened on the parallel market to as much as 245 to the dollar last
month, on persistent dollar demand after central bank limited importers’ access
to dollars on the official interbank market to buy a wide range of goods, in
order to save the external reserves.
The
local currency later rebounded to 216 at the parallel market as Deposit Money
Banks started rejecting cash deposits in dollars a few weeks ago.
The
naira had, however, weakened to about 223 last week before rising to 217 on
Monday Analysts expect the naira to continue rising, saying it is good for the
economy.
The
Head, Investment and Research, Afrinvest West Africa, Mr. Ayodeji Ebo, had said
that the gains made by the naira was good for the economy, adding that it would
help the CBN to gauge the true value of the currency in the event of a possible
devaluation in the near future.
“If
there is a convergence between the interbank and parallel market, the CBN may
possibly review its restrictions imposed on the forex market,” he added.
A
currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, said if the trend
continued, the naira might rise to as much as 200 against the dollar.
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