The naira has come under pressure in recent weeks, losing N6 to close at N470 to dollar at the parallel market.
At the parallel market, rates opened at N464/$1 and closed at N470.00/$1, depreciating N6.00 kobo week-on-week while the local currency has remained stable at the official market, exchanging at N379 to dollar.
The deadly clashes between protestors and security forces escalated and led to number of deaths.
Analysts said that negative sentiment against the naira slowed as rioting, blazes and round-the-clock curfews slowed economic activity and shuttered many businesses.
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Investors in the equities market also earned N19.7 billion profit as market capitalisation rose to N15 trillion, putting year-to-date returns at 6.9 per cent.
Speaking on the development, Murega Mungai Trading Desk Manager, AZA, global currency dealing leader, said naira remains in a risk-averse state, with Amnesty International saying at least 56 people have been killed since the #EndSARS protests began earlier this month.
The Central Bank of Nigeria (CBN) projected that lower oil export revenue and the economic impact from the pandemic will cause external reserves to sink to between $29.9b and $34.3 billion by year-end, with the development expected to further add to naira’s pressure.
Even though speculative buying has been lower than normal, anticipation of naira depreciation has driven hoarding of dollars, while demand for forex from manufacturers persists.
While the CBN has tried measures within its mandate to ensure it meets forex demand, it is likely to see continued pressure on the local currency in coming months.
The stability of the naira has also been boosted by CBN’s continued injection of dollar to the Bureaux de Change (BDCs) sector, where a large part of the retail foreign exchange demands are met.
Over $500 million has in recent months been injected into the BDC segment of the foreign exchange market to keep the naira stable.
The dollar injections, which came after the apex bank resumed dollar sales to the BDCs, was to curb exchange rate volatility and protect the naira against attacks from forex speculators and black market traders.
CBN Director, Trade and Exchange Department, O.S Nnaji, said the gradual sales of forex to licensed BDCs was part of efforts to enhance accessibility of foreign exchange particularly to travelers.
“The CBN also announced the applicable exchange rate for the disbursement of International Monetary Transfer Operators (IMTOs) proceeds as IMTOs to banks, N382 to dollar; banks to CBN, N383 to dollar, CBN to BDCs, N384 to dollar and BDCs to end users not more than N386 to dollar,” he said.
President, Association of Bureaux De Change Operators of Nigeria (ABCON) Aminu Gwadabe said the resumption of dollar sales to BDCs has led to nearly N40 appreciation of the naira in the first week of the exercise, and saved the local currency from continued depreciation.
He said the CBN’s aim of easing pressure on supply and firming up the naira succeeded and will continue to be achieved with improved liquidity in the market.
Gwadane said that BDCs will continue to meet compliance requirements specified by Financial Action Task Force (FATF) and local regulators adding that the collation and reporting of foreign currency transactions and suspicious transactions by BDCs are now fully automated.
In emailed report to investors, Managing Director, Afrinvest West Africa Limited, Ike Chioke, said the equities market sustained ongoing positive performance as investors ignored the violence and unrest in the country and positioned ahead of the release of third quarter 2020 earnings.
