Naira Triumphs against Dollar 7 Days in a Row after CBN Auctioned FX to Dealers, Sets New Rate
- Financial experts have predicted more wins for the naira against the dollar in the coming days
- The development comes as the local currency continues to cruise against the dollar, gaining for seven consecutive days
- On Monday, August 12, 2024, the naira appreciated against the dollar to trade at N1,570.99 from the N1,574 it traded on Friday, August 9, 2024
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The Nigerian currency has continued to hold its ground against the US dollar in the official and parallel markets following a series of interventions by the Central Bank of Nigeria (CBN).
On Monday, August 12, 2024, the naira continued its winning streak against the US dollar, trading at N1,570.99 per dollar, from the N1,574 it traded the previous day.
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Naira continues to gain against dollar
Data from the FMDQ Exchange shows that buyers priced the dollar at a high of N1,593 per dollar and a low of N1,500.
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However, the foreign exchange market experienced a decline in Forex turnover at $246.44 million.
The development comes amid the sale of FX to authorised dealer banks by the CBN last week via the Retail Dutch Auction System (rDAS).
The apex bank embarked on the 1980s model auction to meet the growing demands for FX in the country, which analysts believe pressured the local currency.
CBN crashes dollar for authorised dealer banks
On Wednesday, August 7, 2024, CBN sold $876.26 million to authorised dealers via the Retail Dutch Auction System (rDAS) to reduce the pile of FX demands on the system.
The bank pegged the exchange rate sold to authorised dealer banks on Wednesday, August 7, 2024, at N1,1495 per dollar.
On Friday, August 9, 2024, CBN settled another $815.36 million out of the $1.19 billion foreign exchange demand by end users funded by 26 banks at N1,495 per dollar.
The CBN stated this in a statement containing the summary of its Retail Dutch Auction signed by its director of the Financial Markets Department, Omolara Omotunde Duke.
CBN sells dollar at N1,495 to banks
The statement disclosed that after the collation, the Committee of Governors of the CBN approved a cut-off bid of N1,495.00 per dollar with a total successful bid of $815,362,006.30.
The sale represents 6.95% below the $876 million sold to 26 banks on Wednesday, August 7, 2024.
According to reports, the range of successful bids was between N1,495 and N1,650 per dollar across 26 banks.
CBN disqualifies banks as experts make predictions
Six banks were reportedly disqualified, including four that submitted after the six-hour submission period stipulated time of 9:00 am to 3:00 pm. Also, two banks needed to provide bids using a suitable template.
Experts believe that the CBN's series of steps are responsible for the current value of the naira against the dollar.
Janet Ogochukwu, a senior banker and financial analyst, predicted further gains for the naira against the dollar in the coming days.
She said CBN will soon turn to other dealers, such as Bureau de Change (BDC) operators.
“When CBN begins to sell FX to the other players in the parallel segment of the FX market, we will see further improvements in the value of the naira.
“Currently, CBN is fixated on clearing FX demands piled up in the banks via the rDAS. So, Nigerians should expect a stronger naira in the coming days.”
CBN slashes FX rate for cargo clearance
Legit.ng earlier reported that CBN had reduced the forex rates for cargo clearance after the naira appreciated against the US dollar for two days.
Data from the Customs trade portal shows that the apex bank adjusted the rate to N1,592.636 as of Wednesday, August 7, 2024, from the N1,618.73 reported on Monday, August 5, 2024.
The development means Nigerian importers opening Form M will pay less than they spent the previous day.
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Source: Legit.ng
