Money market operators have said that an annual currency swap sealed by Nigeria and People’s Republic of China would ease pressure on the limited dollar supply at the Investors & Exporters Forex Window (I&E FXW).
The deal according to the operators expected to enhance stability of the Nigeria naira/ United States Dollar exchange rate. Federal government had sign $2.5 billion (RMD 16 billion) currency swap deals to facilitate trade between the two countries, by providing adequate local currency liquidity to Nigerian and Chinese industrialists and other businesses, thereby sidestepping a third currency, the US dollar. Meanwhile, the nation’s currency strengthened against the US Dollar at the parallel (‘black’) market by 0.28 per cent to N362 per dollar while the Naira against Dollar rate remained unchanged at the interbank foreign exchange market and the Bureau De Change segments, trading at N330.00 to a dollar and N360 per a dollar respectively.
But at the I&E FXW segment of forex market the Naira weakened against dollar to close at N360.75 to a dollar from N360.41 to a dollar traded the previously despite weekly injections by Central Bank of Nigeria (CBN) of $ 210 million into the foreign exchange market. Out of the total amount injected $100 million was allocated to Wholesale (SMIS), $55 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for invisibles. Meanwhile, most dated forward contracts at the interbank over-the-counter (OTC) segment appreciated amid rising external reserves.
The two months, three months, six months and 12 months contracts strengthened by 0.06 per cent, 0.16 per cent, 0.69 per cent and 0.85 per cent to close at N366.70 to a dollar , N370.10 a dollar, N381.10 per dollar and N401.90 per dollar respectively. Operators expect stability in exchange rate this week as CBN continues with the weekly intervention.
