Currency gains, trades at N284/Dollar on forex market

The Naira gained on the second day of trading at the new interbank market as it closed at N284/Dollar, with further intervention from the Central Bank of Nigeria (CBN).

On the first day of trading with the new float policy direction in place, the CBN made a $500 million intervention at a rate of N280/Dollar, due to uncertainty in the market.

The currency was trading at N288/Dollar prior to the CBN's intervention compared to the previous peg of N197-199, which the CBN had maintained for the past 16 months.

On the second day of trading, the apex bank also intervened to sell Dollars on the interbank market after the new policy direction failed to attract trading between banks due to liquidity concerns, Reuters quoted traders as saying.

According to a Punch Online report, a total of $31 million sold between N282 and N285/Dollar, was done around 12pm, something traders attributed as an intervention by the central bank. $73 million is the total traded volume on the interbank market.

ALSO READ: Currency loses 31% in value on second day of new CBN float policy

Earlier on Tuesday, the Naira had traded at N287 before it firmed to around N281 and ultimately N284 at the close of business.

On Monday, the CBN said it had cleared up the $4 billion total built-up demand on the forex market. Analysts have come out to say that the CBN will not be able to keep intervening on a large scale to defend the currency.

“They can’t do this for months. We could see further pressure on the naira and it may depreciate to about 300 per dollar,” said Jonas David, emerging-markets analyst at UBS Wealth Management, speaking to Bloomberg.

The Central Bank's forex reserves are currently down to a more than 10-year low of $26.4 billion as the country continues to struggle on the back of extensive drops in the price of crude oil, Nigeria's main earner.

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