Dangote Refinery's new sales policy changes the tide, naira depreciates as demand for dollar rises

• The Nigerian naira is facing tons of unit successful the overseas speech market, and has started the week connected a debased note
• Checks amusement that wherever the naira closed past week astatine N1536, it opened this week with an speech complaint of N1,540.57 to the dollar
• The Central Bank of Nigeria is inactive sustaining interventions to stabilise the naira connected the parallel and authoritative markets

Legit.ng writer Ruth Okwumbu-Imafidon has implicit a decennary of acquisition successful concern reporting crossed integer and mainstream media.

The depreciation of the Nigerian naira has continued, arsenic request for overseas speech remains connected the rise.

Checks amusement that the dollar exchanged for 1,540.57 astatine the authoritative marketplace yesterday, amid accrued request for the US dollars.

This is contempt sustained interventions from the Central Bank of Nigeria (CBN) to support the naira unchangeable astir N1,500/$.

Analysts accidental the FX marketplace is nether a batch of unit with accrued request from much marketplace players. Photo credit: CBN/Pius Utomi Ekpei
Source: Getty Images

Sources reported that the CBN interventions were not capable to conscionable the accrued request for dollars successful the authoritative market.

CBN intervenes to stabilise naira successful FX market

Daily Trust reports that the speech complaint betwixt the naira and dollar depreciated by N18.95 successful the authoritative marketplace past week, to adjacent astatine N1,536.89/$.

The FX complaint past started the caller week astatine a complaint of N1,540 to a dollar, driven by the pressures of rising request for dollars successful the market.

FX income from the CBN arsenic the week rounded up amounted to $92.10 million, bringing it to a full of $230.90 cardinal successful FX sales.

Data from Coronation Merchant Bank showed that CBN accounted for 39.85% of the disposable FX, portion non-bank corporates and exporters accounted for 23.81% and 15.67% respectively.

This took a large dip successful Nigeria’s overseas reserves, which had lone precocious seen a flimsy summation aft nine weeks of declining.

The pressures successful FX request person besides caused different spread betwixt the authoritative marketplace and the achromatic market, and reports amusement that the dollar was bought and sold astatine N1,560 and N1,570 yesterday successful the unconventional achromatic market.

The rising request for dollars whitethorn present airs superior threats to the stableness of the naira successful the authoritative and parallel markets.

Dangote halts naira merchantability of petroleum products

Recall that Dangote Petrochemical Refinery precocious suspended the naira merchantability of petroleum products similar substance and diesel successful Nigeria.

Analysts explicate that this determination whitethorn not beryllium unconnected with the caller accrued request for dollars, astatine the disbursal of the naira.

Petroleum marketers progressive successful importation besides person to hustle for immoderate overseas speech to besides conscionable their obligations.

CBN input inactive accounts for astir 40% of the FX disposable successful the market. Photo credit: CBN/Contributor
Source: Getty Images

Dr. Marcel Okeke, an economist, explained that the halt of naira income would interaction the overseas speech marketplace much than it would interaction the terms of petroleum products.

He noted that with the announcement, each marketers would beryllium looking for dollars, whether to bargain from the Dangote Refinery oregon to import from different refineries extracurricular the country, and this would enactment unit connected the FX market.

CBN Intervention causes dip successful FX reserves

In related news, the CBN precocious intervened successful the forex market, helping to dilatory the naira’s depreciation contempt rising request for dollars.

This translated into a dip successful Nigeria’s FX reserves, which lone accrued somewhat past week, aft weeks of declining.

The Treasury bills marketplace saw unchangeable yields, with investors focusing connected caller auctions, portion capitalist caution successful the enslaved marketplace led to a flimsy emergence successful mean yields to 18.5%.

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Source: Legit.ng