The naira increased its recent gain on the parallel market on Sunday, closing at 380 per United States dollar.
The local unit closed at 381/dollar on Friday, having closed at 380/dollar consecutively between last Tuesday and Thursday.
The naira closed at 305.45 to the dollar on the interbank market on Friday. It was quoted at 382/dollar at the ‘Investor and Exporters FX Window’.
The central bank has continued to supply dollars into the foreign exchange market.
Last Monday, the Central Bank of Nigeria injected $457.3m into various segments of the forex market.
A breakdown of the offer indicated that both spot and forwards garnered the sum of $267.3m while the wholesale segment got $100m.
Also, the Small and Medium Enterprise and invisibles segments comprising of basic travel allowance, tuition fee and medical got $50m and $40m respectively.
Meanwhile, the naira is expected to trade within a narrow range on the back of CBN injection of dollars to improve liquidity and narrow the spread between official and black market rate, according to experts.
“We see naira trading within the prevailing rate as the central bank sustains its dollar sales this week,” one senior currency trader told Reuters.
In a related development, overnight rate falls as cash crunch eases
The country’s overnight lending rate dropped to 26 per cent on Friday.
The rate had hit 65 per cent a day earlier after the CBN refunded excess naira offered in an earlier dollar sale to commercial banks, injecting liquidity back into the money market.
Traders said that a cash squeeze on the money markets on Thursday after banks provided naira to participate in a CBN currency intervention had pushed the overnight rate sharply higher.
The banking system’s cash balance with the central bank stood at N24.61bn early on Friday before the central bank refund, Reuters reported.
“We see rates easing further next week. We anticipate about N200bn would be disbursed to government,” one currency trader said.
The CBN sells hard currency regularly on the interbank market to boost dollar liquidity but in turn mop-up the naira.
If the central bank does not take up all offers, the excess naira are returned to banks.
Mired in recession, the country is grappling with an exchange rate crisis and dollar shortage brought on in part by the low price of oil.
The naira closed at 305.45 to the dollar on the spot market on Friday, and was quoted at 380/dollar on the black market. It was quoted at 382 per dollar at a trading window for investors.
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