CBN pressures forex traders to bid above $380

THE CEN TRAL BANKK OF NIGERIA (CBN) is guiding and pressuring bidders and at its secondary market intervention sales (SMIS) window to increase their bidding price to NGN380/USD as it grapples with managing forex demand and supply in the country.

The apex bank has been unable to meet piles of forex demands for weeks and is desperate to secure more forex to stabilise the naira. Analysts see the CBN action as pandering to the dictate of the World Bank which gave exchange rate unification as one of the conditions for granting Nigeria $1.5 billion loan disbursement

It is believed that the 5.5% currency devaluation could deliver up to the tune of NGN90.00 billion in exchange gains from the oil revenue leg.

Forex traders have been staying away from the market and refused to submit quotes at the official forex market throughout last week.

The operators have been threading cautiously since the weakening of the naira on Friday. At the Friday auction at the retail forex market, the CBN lowered the value to N380 to a dollar from N375 to a dollar. The cation was to avoid incurring losses.

“No quotes for the naira were available on Nigeria’s official market on yesterday after the Central Bank allowed the currency to weaken five per cent at a retail auction in a move to unify the currency’s multiple exchange rates,” dealers said.

Currency traders refused to quote prices for the naira amid confusion about the impact of the apex bank’s adjustment.

The CBN, as the biggest forex supplier at the weekend, asked commercial banks to bid at N380 per dollar, five per cent above its official rate of N360. The naira was exchanging at N461 to dollar at the parallel market, which is N101 above the official rate.

The apex bank has continuously intervened through its periodic supply of dollars in the forex market, offering an average of $100 million weekly via the Secondary Market Intervention Sales (SMIS) Wholesale Window to small businesses.