The naira is expected to remain stable at around N570 to dollar in the coming days given rising foreign exchange liquidity available to commercial banks.
“The Naira held steady on the unofficial market this (last) week, trading at N572 to the dollar. The Central Bank of Nigeria (CBN) Governor Godwin Emefiele told investors at a meeting in New York that the country’s new Dangote refinery—which is slated to begin operations early next year—will save Nigeria up to 30 per cent of forex spend on petroleum imports. Forex reserves increased to $39.8 billion last week from $38.4 billion the previous week, according to the CBN’s 30-day moving average benchmark”.
The CBN had announced an increase in the amount of foreign exchange allocated to banks to meet the requests of customers.
This follows requests of travellers seeking foreign exchange for travel allowances, payment of tuition and medical fees, among other Invisibles, and a warning issued by the CBN Governor, Godwin Emefiele, at a meeting with the Managing Directors of Deposit Money Banks (DMBs).
The caution is coming due to complaints and challenges faced by customers in accessing forex from banks with the apex bank warning that it will take action against any bank that denied customers the opportunity to purchase foreign exchange for legitimate purposes.
The CBN urged interested members of the public seeking to purchase foreign exchange for PTA, BTA, payment of tuition fees or medical fees to approach their respective banks for that purpose.
The increased liquidity came after the apex bank raised weekly dollar allocation to Deposit Money Banks (DMBs) by over 200 per cent.
The banks, which previously received an average of $100 million weekly now get over $400 million to enable them meet increasing for demand for legitimate transactions.
Confirming the development, an economist and Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, said more dollar allocation is needed to get the naira back to position of strength.
For him, the necessary and sufficient conditions for naira stability at the parallel market is a significant increase in forex supply at the official window rather than administrative solutions.
Nigeria’s Excess Crude Account (ECA) balance has continued to deplete, standing at $60 million this month from $70 million in February 2020, report from AZA, global forex dealer has shown.
Trading Desk Manager, AZA, Murega Mungai, said the current stand of ECA marks a roughly 98 per cent fall since the account was set up in 2014.
The National Economic Council (NEC) had earlier announced that the Excess Crude Account (ECA) balance was $72.4 million. Stabilisation Account stood at N24.7 billion as of May 18, while on the Development of Natural Resources, the balance as of May 20 stood at N23.7 billion.
